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Success as a 
Real Estate Agent 


by DirkZeller 


Wiley Publishing, Inc. 

Success as a Real Estate Agent For Dummies 8 

Published by 

Wiley Publishing, Inc. 

1 1 1 River St. 

Hoboken, NJ 07030-5774 

www. wi ley. com 

Copyright © 2006 by Wiley Publishing, Inc., Indianapolis, Indiana 

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About the Author 

Dirk Zeller, who as an agent rose to the top of the real estate field quickly, 
has been on a meteoric rise since he began his career in 1990. 

Throughout his sales career, Dirk was recognized numerous times as one of 
the leading agents in North America. He has been described by industry 
insiders as the most successful agent in terms of high production with life 
balance. His ability to sell more than 150 homes annually, while only working 
Monday through Thursday and taking Friday, Saturday, and Sunday off 
weekly, is legendary in the real estate field. 

Dirk turned his selling success into coaching significance through founding 
Real Estate Champions. Real Estate Champions is the premier coaching com- 
pany in the real estate industry with clients worldwide. Dirk's clients average 
more than a $200,000 increase in their income annually. Dirk has created such 
revolutionary programs as "Protect Your Commission," "Stewardship Selling," 
"The Champion Listing Agent," and "Positioning Yourself as the Expert." 
These programs and others like them have changed the lives of hundreds of 
thousands of real estate agents worldwide. 

Dirk is one of the most published authors in the areas of success, life balance, 
sales training, and business development in the real estate field. He has more 
than 250 published articles to his credit. His weekly Coaches Corner newslet- 
ter is read by over 200,000 subscribers each week. His book Your First Year 
in Real Estate (Prima Publishing) has sold just shy of 100,000 copies in just a 
few years. 

Dirk is also one of the most sought-after speakers in the real estate arena. 
He has spoken to agents and managers at the local, regional, national, and 
international level for most of the large real estate brands, such as Coldwell 
Banker, RE/MAX, Century 21, ERA, and Prudential. He has shared the stage 
with such notable speakers as Zig Ziglar, Brian Tracy, and Les Brown. 

Besides contributing to the real estate agent community, Dirk and his wife of 
16 years, Joan, are very active in their church. They live with their 4-year-old 
son, Wesley, and 8-month-old daughter, Annabelle, in Bend, Oregon. 


So many people have contributed to my success in life, from my parents to 
my two brothers, my mentors and coaches, and now my two children, Wesley 
and Annabelle. No one, however, has contributed to my success in the real 
estate field more than my wife, Joan. I dedicate this book to her: my supporter, 
encourager, coach, role play partner, accountability partner, and best friend. 
The success that has been achieved in real estate sales, writing, speaking, 
training, and coaching was achieved only through our partnership. We did it 
together! Some 16 years later, I'm still amazed at God's grace in giving me a 
wife without compare. 

Author's Acknowledgments 

Just as a successful business is always a collaborative effort, so is a book. 
While I receive the unfair lion's share of the credit, countless others are 
behind the scenes making me look good. 

To Barbara Schenck, who took my experiences, strategies, thoughts, and 
techniques and put them into the Dummies format you enjoy, thank you. This 
book would not exist without your enduring effort and patience. 

To the team at Real Estate Champions, an incredible group of people who 
change people's lives each day, you are the best. Thank you to our support 
staff of Judy Cox and Julie Porfirio whose loyalty all these years means so 
much to me and to Luci Hamilton and Mary Stewart whose passion to serve 
others is unparalleled. A special thanks to Rachelle Cotton who arduously 
read every unreadable handwritten word and typed, corrected, and revised 
the whole manuscript while enduring every last-minute induced deadline . . . 

To our coaches and salespeople who really change the lives of everyone they 
touch; to our marketing staff of Dan Matejsek and Shaylor Murray; everyone 
at Real Estate Champions had a hand in this book. 

I also need to thank the team at Wiley. Tracy Boggier, acquisition editor, 
Chrissy Guthrie, project editor, Jessica Smith, copy editor, and the Composi- 
tion Department. You are truly pros at what you do. I also want to thank Ken 
Edwards, technical reviewer, as well as my literary agent, Barry Neville, of 
The Neville Agency. 

Lastly, I must thank my personal clients and our Real Estate Champions 
clients. With you constantly challenging us and wanting passionately to 
improve, you drive us to work so hard to stay ahead. It would be easy to 
become complacent, but you don't let us. Thanks! 

Publisher's Acknowledgments 

We're proud of this book; please send us your comments through our Dummies online registration 
form located at www. dummies . com/register/. 

Some of the people who helped bring this book to market include the following: 

Acquisitions, Editorial, and 
Media Development 

Project Editor: Christina Guthrie 

Acquisitions Editor: Tracy Boggier 

Copy Editors: Sarah Faulkner, Jessica Smith 

Editorial Program Coordinator: Hanna K. Scott 

Technical Editor: Dr. Kenneth W. Edwards 

Editorial Manager: Christine Meloy Beck 

Editorial Assistant: Erin Calligan, Nadine Bell, 
David Lutton 

Cover Photos: © Jeff Cadge/Getty Images 

Cartoons: Rich Tennant 

(www . the5thwave . com) 

Composition Services 

Project Coordinator: Jennifer Theriot 

Layout and Graphics: Claudia Bell, Karl Brandt, 
Carl Byers, Stephanie D. Jumper, 
Barbara Moore, Barry Offringa, 
Alicia B. South 

Proofreaders: John Greenough, 

Jessica Kramer, Christy Pingleton, 

Indexer: Techbooks 

Special Help 

Elizabeth Rea 

Publishing and Editorial for Consumer Dummies 

Diane Graves Steele, Vice President and Publisher, Consumer Dummies 

Joyce Pepple, Acquisitions Director, Consumer Dummies 

Kristin A. Cocks, Product Development Director, Consumer Dummies 

Michael Spring, Vice President and Publisher, Travel 

Kelly Regan, Editorial Director, Travel 
Publishing for Technology Dummies 

Andy Cummings, Vice President and Publisher, Dummies Technology/General User 
Composition Services 

Gerry Fahey, Vice President of Production Services 

Debbie Stailey, Director of Composition Services 

Contents at a Glance 

Introduction / 

Part 1: Acquiring the Keys to Real Estate Success 7 

Chapter 1: Discovering the Skills of a Successful Agent 9 

Chapter 2: Residential versus Commercial: Deciding Which Type 
of Real Estate Is Right for You 21 

Chapter 3: Pairing with the Right Agency 41 

Chapter 4: Researching and Understanding Your Marketplace 61 

Part 11: Prospecting for Buyers and Setters 73 

Chapter 5: Prospecting Your Way to Listings and Sales 75 

Chapter 6: Mining Gold from Referrals 95 

Chapter 7: Winning Business from Expired and FSBO Listings 115 

Chapter 8: A Time-Tested Prospecting Tool: Planning and Hosting 

a Successful Open House 139 

Chapter 9: Presenting and Closing Listing Contracts 157 

Part 111: betietoping a Winning Sates Strategy 183 

Chapter 10: Determining a Home's Ideal List Price 185 

Chapter 11: Getting the House Ready for Showing 203 

Chapter 12: Marketing Yourself and Your Properties Online and in Print 221 

Chapter 13: Negotiating the Contract and Closing the Deal 245 

Part IV: Running a Success fut Real Estate Business. ...261 

Chapter 14: Staking Your Competitive Position 263 

Chapter 15: Keeping Clients for Life 281 

Chapter 16: Maximizing Your Time 305 

Part V: The Part of Tens 327 

Chapter 17: Ten Must-Haves for a Successful Real Estate Agent 329 

Chapter 18: Ten Tips for Working with Buyers 335 

Chapter 19: Ten Biggest Mistakes and How to Avoid Them 341 

Chapter 20: Ten Web Sites for Real Estate Agents 347 

Index 351 

Table of Contents 

Introduction / 

About This Book 1 

Conventions Used in This Book 2 

What You're Not to Read 3 

Foolish Assumptions 3 

How This Book Is Organized 3 

Part I: Acquiring the Keys to Real Estate Success 4 

Part II: Prospecting For Buyers and Sellers 4 

Part III: Developing a Winning Sales Strategy 4 

Part IV: Running a Successful Real Estate Business 5 

Part V: The Part of Tens 5 

Icons Used in This Book 5 

Where to Go from Here 6 

Part 1: Acquiring the Keys to Real Estate Success 7 

Chapter 1: Discovering the Skills of a Successful Agent 9 

Having a Financial Goal 10 

Acting and Working Like a Top-Level Professional 11 

Serving as a fiduciary representative 11 

Guiding financial decisions 13 

Avoiding the role of a home inventory access provider 13 

Winning Customers 14 

Understanding the importance of customer creation 

over customer service 14 

Developing sales ability to win customers 15 

Gaining customers no matter the market conditions 16 

Becoming a Listing Agent 17 

Pathways to Success: Which Will You Take? 18 

Chapter 2: Residential versus Commercial: Deciding 

Which Type of Real Estate Is Right for You 21 

Sizing Up the Differences between Residential and 

Commercial Agents 21 

Comparing commercial and residential real estate: 

It's apples to oranges 22 

Weighing advantages and disadvantages 24 

Selecting Your Specialty 38 

Evaluating your risk tolerance 38 

Taking the 7-question litmus test 39 

^ Success as a Real Estate Agent For Dummies 

Chapter 3: Pairing with the Right Agency 41 

Weighing Your Agency Options 41 

Enthusiasm, coffee, and doughnuts: What makes a good office?. ..42 

Considering the rules you'll be playing by 44 

Does size really matter? 46 

Prioritizing your values and expectations 47 

Narrowing Your Agency Short List 48 

Do your homework 48 

12 questions to ask each broker 50 

Making agency comparisons 53 

And the winner is 53 

Joining Your New Agency Team 54 

Building a relationship with your manager 54 

Forming partnerships 56 

Chapter 4: Researching and Understanding Your Marketplace 61 

Three Truths that Rule Every Real Estate Market 62 

Acquiring Knowledge about Your Marketplace 63 

Collecting marketplace information from key sources 63 

Analyzing the facts and figures 66 

Compiling a marketplace analysis 69 

Projecting trends on the horizon 70 

Putting Your Findings to Work 71 

Sharing your market research to build prospect relationships 72 

Distributing your findings to gain publicity 72 

Part 11: Prospecting for Buyers and Setters 73 

Chapter 5: Prospecting Your Way to Listings and Sales 75 

What Prospecting Is — and Isn't 75 

Prospecting for Listings versus Buyers 77 

Prospecting for listings 77 

Prospecting for buyers 78 

The Four Pillars of Prospecting 79 

1. Set a daily time and place for prospecting 79 

2. Fight off distractions 79 

3. Follow the plan 80 

4. Be faithful to yourself and finish what you start 81 

Putting Prospecting to Work for You 82 

Targeting prospects 82 

Setting and achieving prospecting goals 83 

Shattering the myths 85 

Finding Safety and Success in Numbers 88 

The law of accumulation 88 

The power of consistency 89 

Table of Contents tff 

The never-ending prospecting cycle 89 

Tracking daily goals and results 90 

Managing contacts 91 

Message in a Bottle: Staying in Touch 92 

Chapter 6: Mining Gold from Referrals 95 

Referral Truths and Consequences 95 

Building a Referral-Based Clientele 96 

Sources of referrals 96 

Constructing a referral database 99 

Three golden rules for cultivating referrals 99 

Developing Your Referral Strategy 105 

Helping people send you the type of referrals you seek 106 

Setting your goal 107 

Approaching your referral sources 108 

Asking the right questions at the right time 110 

Handling the referrals you receive Ill 

Developing Referral Relationships 112 

Making first-time contact 112 

Converting referrals into clients or referral sources 113 

Chapter 7: Winning Business from Expired and FSBO Listings 115 

Three Reasons to Work Expired and FSBO Listings 116 

Turning Bad Listings to Good Business: 

The ABCs of Expired Listings 117 

Finding expired listings 117 

Treating expired listings as high-probability leads 118 

Engaging an expired listing 119 

Qualifying expired listings 122 

Calling the seller: What to say and how to say it 123 

Entering the For-Sale-By-Owner World 127 

Why bother with FSBOs? 127 

Finding FSBO listings 128 

Converting FSBO listings: The successful agent's approach 129 

Playing the game of lead follow-up 135 

Chapter 8: A Time-Tested Prospecting Tool: Planning and 

Hosting a Successful Open House 139 

Why Host an Open House? 140 

A chance to meet potential clients face to face 140 

A way to meet the needs of dual-income families 142 

A means of catering to the do-it-yourselfer's 

home-buying needs 142 

A high-touch opportunity in a high-tech world 143 

Setting and Achieving Your Open House Objectives 144 

Planning Your Open Houses to Gain Maximum Exposure 145 

Featuring a high-appeal home 146 

Looking good: Leveraging the power of curb appeal 146 

}{( f Success as a Real Estate Agent For Dummies 

Inviting the neighbors 148 

Don't skimp: Feature a home in the upper-middle price range. ...148 

Showing the way: Leading prospects to the open house 149 

Being the Host with the Most: Effectively Managing the Open House... 150 

Doing your homework before prospects arrive 150 

Wallflower or social butterfly: Meeting and greeting 

during the open house 153 

Securing the deal by following up after the open house 155 

Chapter 9: Presenting and Closing Listing Contracts 157 

Qualifying Your Prospects 158 

Why and how to qualify prospects 158 

Checking your prospect's "DNA" 161 

Fundamentals for Presenting Listings to Qualified Prospects 164 

Know the purpose of your presentation 164 

Make your presentation useful and interesting 165 

Keep it short and sweet 166 

Focus on four keys to a great delivery 167 

Stay in control 170 

Giving a Quality Presentation: A Four-Phase Formula 171 

Getting off to a good start 171 

Setting yourself apart from the real estate agent pack 172 

Presenting prices 176 

Going for the close 178 

Dealing with Sales Objections 178 

Delaying objections 178 

Handling objections in four easy steps 179 

Asking for the Order 181 

Bringing the Presentation to a Natural Conclusion 181 

Part HI: Developing a Winning Sales Strategy 183 

Chapter 10: Determining a Home's Ideal List Price 185 

Examining Pricing Approaches 185 

The ABCs of CMAs 186 

Staying current 188 

Factors that contribute to a CMA 188 

Creating a CMA 190 

CMA mistakes to avoid 192 

Taking CMA results with a grain of salt 193 

Developing Your Pricing Philosophy 194 

Avoiding overpricing just to please the buyer 195 

Steering clear of starting high and reducing later 196 

Coming in on-the-button 197 

Troubleshooting Advice for Pricing Problems 198 

Reducing prices: A five-step formula 198 

Accepting over-priced listings 201 

Table of Contents tff f / 

Chapter 11: Getting the House Ready for Showing 203 

Advising Different Kinds of Sellers 203 

Mr. Fix-It 204 

The gung-ho renovator 204 

Stuck in the '60s 205 

The couch potato 205 

The calculator 206 

Counseling Clients on Home Improvements 206 

Improvements that contribute to the sales price 207 

Improvements to skip 209 

Passing the Curb Appeal Test 210 

Landscaping 210 

Exterior paint condition and color 211 

Prepping the Interior of the Home 212 

Staging a home 213 

House clean-up checklist 217 

Final Ways to Make a Great First Impression 218 

Enhancing the first glance 219 

Helping the buyer "move in" 220 

Chapter 12: Marketing Yourself and 

Your Properties Online and in Print 221 

Targeting Your Marketing Message 222 

Defining your target audience 222 

Positioning your offering 224 

Creating and Placing High-Impact Ads 227 

The power of a great headline 227 

Writing high-impact advertising copy 228 

Choosing the right media outlets 230 

Converting ad interest to action 231 

Promoting Properties by Using Flyers 232 

Creating outside-the-home flyers 232 

Creating inside-the-home flyers 233 

Design and production tips 233 

Spreading the Word Online 234 

Types of agent Web sites 234 

Attributes of a good site 235 

Creating domain names 236 

Driving traffic to your site 237 

Converting lookers to leads 237 

Converting leads to clients 238 

Using 238 

Putting your agency's Web site to work 239 

Enhancing Exposure via Virtual Tours 239 

Producing a virtual tour 240 

Leading prospects to your virtual tour 242 

A Picture's Worth a Thousand Words 242 

Choosing your camera 242 

Taking digital photos 243 

JC((/ Success as a Real Estate Agent For Dummies 

Chapter 13: Negotiating the Contract and Closing the Deal 245 

Informing Clients (and Yourself) of What Happens Next 246 

Keys to Representing a Seller 247 

Be prepared 247 

Protect the seller at all times 248 

Keys to Representing a Buyer 249 

Partnering with the Other Agent 250 

Advancing or Accepting an Offer 251 

Presenting a buyer's low offer 252 

Receiving a buyer's low offer 253 

Taking the insult out of an insulting offer 254 

Getting beyond emotion 254 

Turning concessions into victories 255 

Dealing with I win/you lose clients 256 

Working with a Closing Team 257 

The loan officer 257 

The home inspector 258 

The appraiser 258 

The escrow closer 258 

Avoiding Derailment 259 

Part IV: Running a Successful Real Estate Business 261 

Chapter 14: Staking Your Competitive Position 263 

Competitive Positioning Defined 263 

Calculating and Analyzing Real Estate's Big Three Statistics 265 

Average list price to sales price 265 

Average days on the market 267 

Average listings taken versus listings sold 269 

Interpreting the Findings 271 

Finding your edge 271 

Positioning yourself against other agents 272 

Using market-area statistics to set your goals 274 

Increasing Your Slice of the Market 275 

How to calculate market share 275 

How to increase market penetration 276 

How to achieve market dominance 277 

Conveying Your Competitive Advantage in Prospect Presentations ....278 

Defining your unique competitive position 279 

Proving your excellence: You don't get paid for second place ....280 

Chapter 15: Keeping Clients for Life 281 

Achieving Relationship Excellence 282 

Defining your service standards 284 

Promising, and then flawlessly delivering 285 

Viewing the closing as a starting point, not a finish line 286 

Table of Contents %{} 

Creating After-the-Sale Service 287 

Laying the groundwork during the transaction period 288 

Setting a service agenda for the first 30 days after the sale 289 

Establishing an ongoing communication strategy 292 

Customizing your messages 298 

Establishing Awesome Service 299 

Ensuring positive service encounters 299 

Developing a service plan 301 

Chapter 16: Maximizing Your Time 305 

Spending Less Time to Accomplish More 305 

Applying Pareto's Principle: The 80:20 Rule 307 

Making time for the things that impact your success 307 

Weighting your time to what matters 309 

Dealing with time-consuming fires 312 

Time Blocking Your Way to Success 313 

Setting your schedule in time blocks 313 

Time-blocking mistakes to block out 317 

Killing the Time Killer Called Procrastination 319 

Moving forward with a clear vision 320 

Knowing your objectives 320 

Setting your priorities 321 

Giving yourself deadlines and rewards 322 

Carpe Diem: Seize Your Day 324 

Stop wasting time 324 

Stop letting others waste your time 324 

Manage constant interruptions 325 

Keep phone calls short 325 

Use your car to gain efficiency and career advancement 326 

Part V: The Part of Tens 327 

Chapter 17: Ten Must-Haves for a Successful Real Estate Agent . . .329 

A Good Contact Management System 329 

A Real Estate Calculator 330 

Professional Attire 330 

Personal Web Site 331 

Professional Business Cards and Stationery 331 

A Clean, Professional, Reliable Car 332 

A Headset for Your Phone 333 

A Number-Based Business Plan 333 

Sales Scripts 334 

Support System 334 

Chapter 18: Ten Tips for Working with Buyers 335 

Qualify Your Prospects 335 

Work Only with Committed Clients 336 

)C{Ji Success as a Real Estate Agent For Dummies 

Don't Assume the Buyer Is Exclusively Committed to You 336 

Ask For and Win an Appointment 337 

Be Ready to Counter Typical Buyer Misconceptions 337 

Explain the Services You Provide 338 

Develop a Partnership with a Lender 339 

Ask Buyer Prospects Plenty of Questions 339 

Take Control 339 

It's Okay to Say No 340 

Chapter 19: Ten Biggest Mistakes and How to Avoid Them 341 

Failing to Build Your Real Estate Practice as a Business 341 

Poor Financial Management 342 

Not Buying Enough of What You Sell 343 

Poor Use of Time 344 

Not Investing in Your Most Important Business Asset: Yourself! 344 

Making Yourself Available to Prospects and Clients 24-7 344 

Failing to Communicate Frequently 345 

Being Inconsistent 345 

Ignoring the Fundamentals 346 

Talking Too Much, Listening Too Little, and Then Going Silent 346 

Chapter 20: Ten Web Sites for Real Estate Agents 347 347 347 348 348 348 349 349 349 350 350 

Index 351 



elcome! You're about to move into the league of the most successful 
real estate agents. 

Real estate sales is the greatest business in the world. In my more than 20 
years as a business owner and entrepreneur, I've yet to find a business equal 
to real estate sales when it comes to income potential versus capital invest- 
ment. In any marketplace, a real estate agent has the opportunity to create 
hundreds of thousands of dollars in income. (I coach many agents who earn 
more than one million dollars per year.) An agent's income is especially sig- 
nificant when viewed against the capital investment required by the business. 
Most agents need as little as $2,000 to start up their practices. Compare that 
to any other business and you'll find that most involve sizeable investments 
and burdensome loans to buy equipment, lease space, create marketing 
pieces, develop business strategies, and hire employees — all to achieve 
what is usually a smaller net profit than what a real estate agent can achieve 
in the first few years. It's almost too good to be true! 

Real estate sales paved the way for me to become a millionaire at a very 
young age. It has provided a solid income, many investment opportunities, an 
exciting lifestyle, and a platform from which I've been able to help many 
others achieve their own goals and dreams in life. 

About This Book 

This book is about becoming a successful real estate agent, for sure. It's also 
about acquiring sales skills, marketing skills, time-management skills, people 
skills, and business skills. It's about gaining more respect, achieving more 
recognition, making more money, and closing more sales. It's a guide that 
helps you achieve the goals and dreams that you have for yourself and your 

I'm delighted to share with you the keys I've found for real estate success and 
to allow you to learn from the mistakes I've made along the way. (I'm a firm 
believer in the idea that we often learn more from failures than successes, 
but that doesn't mean you have to repeat my failures.) 

Success as a Real Estate Agent For Dummies 

The techniques, skills, and strategies I present throughout this book are the 
same ones I've used and tested to perfection personally and with thousands 
of coaching clients and hundreds of thousands of training program partici- 
pants. This book is not a book of theory but of "real stuff" that works and is 
laid out in a hands-on, step-by-step format. You can also find time-tested 
scripts in most sales-oriented chapters. The scripts are designed to move 
prospects and clients to do more business with you. (If you're a junior 
member of the grammar police, you may find that some don't perfectly align 
with your expectation of the English language. The objective of sales scripts, 
though, is not perfect sentence structure but rather maximum persuasion of 
the prospect or client.) 

If you apply the information contained in this book with the right attitude, 
and if you're consistent in your practices and in your success expectations, 
your success in real estate sales is guaranteed. 

Contentions Used in This Book 

Throughout this book I've incorporated a number of style conventions, most 
aimed at keeping the book easy to read and a few aimed at keeping it legally 

*«* Throughout this book, I use the term real estate agent rather than Realtor 
unless I'm talking specifically about members of the National Association 
of Realtors (NAR). Realtor is a registered trademark owned by the NAR, 
which requires that the term appear either in all capital letters or with 
an initial capital R. For your information, all Realtors are real estate 
agents, but only those real estate agents who are members of and sub- 
scribe to the Association's strict code of ethics are Realtors. 

v" The word agency describes the relationship that a real estate agent has 
with members of the public, or as they're sometimes called, clients. When 
clients list a home for sale, they enter a contractual relationship with the 
agent who will represent their interests. That agreement is called an 
agency relationship. Every state and province has a unique set of laws 
stipulating how consumers and real estate agents work in an agency rela- 
tionship. These agency laws have been reworked and clarified over the 
past decade. In earlier days, agents didn't formally represent homebuy- 
ers. Instead, agents were obligated solely to the sellers, for whom they 
worked basically as sub-agents. That's all ancient history, though, and 
throughout this book when I refer to agency agreements, I'm describing 
the real estate agent's relationship with buyers or sellers, depending 
upon whether the agent is the listing agent or the selling agent. 

u* Bulleted and numbered lists present important information in a quick- 
skim format. Watch for lists marked by numbers or checkmarks. They 
contain essential facts, steps to take, or advice to follow. 


*<* Whenever I introduce a new term, I italicize it and follow it up with a 
brief definition. 

v* Web sites and e-mail addresses appear in mono font to make them stand 
out on the page. 

What \lou're Not to Read 

Personally, I think you should read every word of this book. (I wrote it, after 
all!) However, if you're the bare-bones info type, you can skip the sidebars 
that appear throughout the book. You know when you come upon a sidebar 
because it appears in a gray box. The sidebars contain interesting, often 
anecdotal, information that's related to the topic but not essential to under- 
standing it. 

Foolish Assumptions 

As I compressed a career's worth of real estate experience and coaching 
advice into these pages, I had to make the following assumptions about you, 
the reader: 

u* You're already a licensed real estate agent. If you haven't yet taken the 
real estate license exam, consider the book Real Estate License Exams 
For Dummies by John A. Yoegel (Wiley). 

U* You're looking to rev up your real estate business, whether you're just 
starting out or have been in the business for a while. Some of you may 
be deciding whether to specialize in commercial or residential real 
estate and may be considering which real estate company to join. 
Others have already launched careers, hung licenses with good compa- 
nies, and are now looking for advice on how to climb the success curve 
faster and higher. Still others are interested in refining specific skills, 
such as prospecting, selling, running their businesses more efficiently, or 
building customer loyalty. 

HoW This Book Is Organized 

Each of the five parts of this book deals with a different aspect of your real 
estate career: making fundamental career decisions, attracting clients, clos- 
ing sales, building a strong business, and tapping into the best resources and 
advice available. 

Success as a Real Estate Agent For Dummies 

Every part of the book is a self-standing component. You can scan the table 
of contents and flip directly to the chapter or section that addresses your 
interests, or you can search the index and go straight to specific pages that 
answer your questions. I think you can benefit the very most by reading the 
entire book, but you don't have to read it sequentially from cover-to-cover to 
make sense of the contents. 

Part 1: Acquiring the Keys 
to Real Estate Success 

The four chapters in this first part pave the way for your real estate success. 
The first chapter provides an overview of the skills you need, gives advice 
for acquiring expertise, and shows what steps to take to swing the odds for 
success your way. The second chapter helps you understand and decide 
between residential and commercial specialties. Chapter 3 guides you 
through the process of evaluating, choosing, and joining a real estate com- 
pany. And Chapter 4 helps you research and understand the marketplace in 
which you are working. 

Part 11: Prospecting For Buyers and Setters 

This five-chapter part unlocks the secrets of client development. It starts 
with a chapter dedicated to how, when, and why to prospect. Following chap- 
ters focus on how to mine gold from referrals, how to win business from 
expired and FSBO listings, how to use open houses as the ultimate prospect- 
ing approach and, finally, how to convert all that prospecting effort to sales 
action by perfecting your skills at presenting and closing contracts. 

Part HI: Developing a Winning 
Sales Strategy 

This part is all about sales. It begins with a chapter that helps you establish a 
home's ideal sales price based on current market conditions, your own pric- 
ing philosophy, and what I call my magic marketing formula. The next chap- 
ter is about getting the house ready to show. It's followed by an essential 
chapter on how to market properties online and in print. The part ends with 
an important chapter on how to negotiate contracts and close deals. 


Part IV: Running a Successful 
Real Estate Business 

In this part, I go into coaching mode and help you position yourself for suc- 
cess. The first of the three chapters in this part gives you tools, systems, 
strategies and techniques to understand your marketplace and define where 
you stand in it, and stake your own competitive position. In the second chap- 
ter, I share advice for building client relationships, developing client loyalty, 
delivering unbeatable service, and winning client relationships that last a life- 
time. This part ends with an invaluable chapter that is packed full of how-to 
techniques and advice for generating the greatest return on the time you 
invest in your real estate career. 

Part V: The Part of Jens 

This final part sends you off with four fast ten-part lists. Chapter 17 presents 
ten tools that are essential for any real estate agent's success. Chapter 18 is a 
round up of top ten tips for working with buyers. Chapter 19 tells you how to 
avoid the ten big real estate sales mistakes. Finally, Chapter 20 closes the book 
with ten great Web sites to click on for a wealth of additional information. 

Icons Used in This Book 

This wouldn't be a For Dummies book without the handy symbols that sit in 
the outer margin to alert you to valuable information and advice. Watch for 
these icons: 

Why reinvent the wheel? Whenever I present a true story or a lesson that I've 
learned from first-hand experience, this icon flags the paragraph so you can 
benefit from the recollection. 

When you see this icon, highlight the accompanying information. Jot it down, 
etch it in your memory, and consider it essential to your success. 

Success as a Real Estate Agent For Dummies 

The bull's-eye marks on-target advice and tried-and-true approaches that 
save time, money, and trouble as you achieve real estate success. 

When there's a danger to avoid or just a bad idea to steer clear of, this icon 
sits in the margin issuing a warning sign. 

Where to Go from Here 

The beauty of this book is that you can start wherever makes most sense 
for you. 

If you're a newcomer to the field of real estate sales, I suggest you start with 
Part I, in which I've consolidated all the start-up information that you're likely 
to be looking for. 

If you've been in the trenches for a while and simply aren't having as much 
success as you'd like, start with Chapter 5 and go from there. 

If you're time-pressed, facing a crucial issue, or grappling with a particular 
problem or question, turn to the table of contents or index to find exactly the 
advice you're seeking. 

Wherever you start, get out a pad of yellow sticky notes or a highlighter pen 
and get ready to make this book — and all the information it contains — your 
own key to success. I send you off with my very best wishes! 


Acquiring the Keys 

to Real Estate 


The 5 th Wave 

By Rich Tennant 



" I can shovr you this one. It's got a pool m the 
backyard. I've also got a six bedroom vtith a 
fountain out £ront I can show you, but nothing 
right no-w -with a nvoat.'" 

In this part.. 

t M/ hether you're expanding an up-and-running real 
▼ ▼ estate business or just setting out in this field of 
sky-high opportunity, the chapters in this part will speed 
you to success. Count on the upcoming pages to help you 
understand the business environment, weigh the most 
important career issues, ask the right questions, and 
unlock answers that get your real estate practice headed 
in the right direction. 

In four fast chapters, I share tried-and-true advice for what 
it takes to make it as a real estate agent, how to decide 
between a residential or a commercial real estate specialty, 
how to choose the real estate company that best suits you, 
and how to acquire the market knowledge that makes you 
a trusted client resource and respected professional in 
your field. 

If you have any doubts about what it takes to achieve real 
estate success, consider this part a must-read. 

Chapter 1 

Discovering the Skills 
of a Successful Agent 

In This Chapter 

Defining financial success 

Understanding the role and importance of a professional real estate agent 
Knowing the importance of customer creation and sales skills 
Choosing the right path to real estate success 

£ach agent defines success slightly differently. Some agents set their goals 
in dollars, some are attracted to the opportunity to be their own bosses 
and build their own businesses, and some want the personal control and free- 
dom that a real estate career allows. Achieving success, however, requires the 
same basic fundamentals regardless of what motivates your move into real 
estate. Agents who build successful businesses share four common attributes: 

f" They're consistent. They perform success-producing activities day in and 
day out. Rather than working in spurts — making 50 prospecting calls in 
two days and then walking away from the phone for two weeks — they 
proceed methodically and steadily, day-after-day, to achieve their goals. 

is* They believe in the law of accumulation. The law of accumulation is 
the principle that says with constant effort everything in life, whether 
positive or negative, compounds itself over time. No agent becomes an 
overnight success, but with consistency, success-oriented activities 
accumulate momentum and power and lead to success every time. 

is* They're life-long learners. The most successful agents never quit 

improving. Their passion for improvement is acute, and they commit the 
time, resources, and energy it takes to constantly enhance their skills 
and performance. 

is* They're self-disciplined. They have the ability to motivate themselves 
to do the activities that must be done. A successful agent shows up daily 
for work and puts in a full day of work on highly productive actions such 
as prospecting and lead follow-up. They make themselves do things that 
they don't want to do so they can have things in life that they truly want. 

/ (/ Part I: Acquiring the Keys to Real Estate Success 


My own auspicious beginning 

As an original dummy in real estate sales, I'm 
the perfect author for this book. On my very first 
listing presentation, I went to the wrong house. 
Can you imagine arriving at the wrong address 
for your first presentation? The worst part is that 
the man who answered the door let me in. To 
this day, I'm not sure why he let me in and let me 
begin my listing presentation. I was nearly 
halfway through my presentation before I fig- 
ured out the mistake! He just sat quietly listen- 
ing to me talk about listing his home. He actually 
did have an interest in selling his home in the 
near future, so he just listened. I finally realized 
I was in the wrong house when I glanced over 
and saw the address on a piece of mail on 
the table. I had transposed a number on the 

address, which put me in the wrong house. All 
the while, the real seller was waiting for me 
down the street. The good news was that I suc- 
cessfully listed the man's home a few months 

In the end, it really doesn't matter where you 
start in your career or what mistakes you make 
in the early stages. Everyone makes mistakes in 
new endeavors. What matters most is having a 
plan or process that keeps you moving down 
the track toward your goals. Most people would 
have quit with such a rocky start as mine. 
However, the sure way to lose is to quit. The 
only way you win is to keep going. 

You're already on the road to real estate success, demonstrated by the fact that 
you've picked up this book to discover what it takes to become a great agent. 
This first chapter sets you on your way to success by providing an overview of 
the key skills that successful real estate agents pursue and possess. 

Hai/ing a Financial Goat 

One of the first steps toward success is knowing what you want out of your 
real estate career. However, "financial independence" is not a specific-enough 


I've been in real estate, either in direct sales or teaching, speaking, training, 
writing, or coaching people, for nearly 20 years. I've met tens of thousands of 
agents and nearly every one started selling real estate with the same goal of 
financial independence. Countless times I've asked the question: "Tell me, how 
do you define financial independence?" What I usually hear in response is some 
variation of the answer, "So I don't have to worry about money anymore." 

The key to eliminating money worries is establishing a financial goal — an 
actual number — that you need to accumulate in order to achieve the quality 
of life you want to enjoy. Financial independence boils down to a number. Set 
that number in your mind and then launch your career with the intention to 
achieve your goal by a specific date. 

Chapter 1: Discovering the Skills of a Successful Agent / / 

By having your financial goal in mind, you find clarity and can see past the 
hard work that lies ahead of you. When you have to endure the rejection, 
competition, disloyal customers, and challenges that are inevitable along the 
way, your knowledge about the wealth you're working to achieve helps you 
weather the storms of the business. 

Acting and Working Like a 
lop-LeVei Professional 


Real estate agents join doctors, dentists, attorneys, accountants, and finan- 
cial planners in the ranks of licensed professionals that provide guidance and 
counsel to clients. The big difference is that most real estate agents don't 
view themselves as top-level professionals. Many agents, and a good portion 
of the public, perceive themselves as real estate tour guides, as home inven- 
tory access providers, or even as just necessary cogs in the wheel of the 
property sale transaction. The best agents, however, know and act differently. 

Real estate agents are fiduciary representatives and financial advisors — 
not people paid to unlock front doors of houses for prospective buyers. A 
fiduciary is someone who is hired to represent the interests of another. A 
fiduciary owes another person a special relationship of honesty, commit- 
ment, exclusivity in representation, ethical treatment, and protection. Build 
your real estate business with a strong belief in the service and benefits you 
provide your clients, and you'll provide a vital professional service while 
being recognized as the valuable professional you are. 


Sen/my as a fiduciary representative 

Real estate agents represent the interests of their clients. As an agent, you're 
bound by honor, ethics, and duty to work on your client's behalf to achieve 
the defined and desired results. This involves the following functions: 

v* Defining the client's objective. To serve as a good fiduciary representa- 
tive, you need to start with a clear understanding of the objectives your 
client is aiming to achieve through the sale or purchase of property. Too 
many agents get into trouble by starting out with uncertainty about the 
interests of the people they're representing. To avoid this pitfall, turn to 
Chapter 9 for advice and a questionnaire you can use when interviewing 
and qualifying prospects. 

u* Delivering counsel. In the same way that attorneys counsel clients on 
the most cost-effective way to proceed legally, it's your job to offer simi- 
larly frank counsel so that your clients reach the real estate outcomes 
they seek. 

7 w? P ar t ' : Acquiring the Keys to Real Estate Success 


An attorney may encourage a client to proceed with a lawsuit when the 
client has a high probability of winning, or she may recommend an out- 
of-court settlement when odds point toward a court loss that could 
leave the client with nothing but legal bills to pay Likewise, you need to 
be able to steer your clients toward good decisions regarding the value 
of their homes, the pricing strategies they adopt, the marketing 
approaches they follow, and the way their contract is negotiated in 
order to maximize their financial advantage. The chapters in Part III of 
this book help you develop the knowledge you need in these areas. 

w* Diagnosing problems and offering solutions. A good agent, like a good 
doctor, spends a great deal of time examining situations, determining 
problems, and prescribing solutions. In an agent's case, the focus is on 
the condition and health of the home a client is trying to buy or sell. The 
examination involves an analysis of the property's condition, location, 
neighborhood, school district, street appeal, landscaping, market com- 
petitiveness, market demand, availability for showing, and value versus 
price. The diagnosis involves an unvarnished analysis of what a home is 
worth and what changes or corrections are necessary. 

Some say that agents should present all of the options available to their 
clients and then should recommend the course of action that they feel is 
best. By doing this, agents allow their clients to make the final decision. 
While many experts praise the virtues of this approach, I prefer the diag- 
nostic and prescriptive approach because it positions you better as the 
expert. When clients make poor choices such as setting the wrong price 
on their home or making an initial offer that is too low, you may still 
receive some or all of the blame even though you were merely giving 
them options and they chose the wrong one. 

Many agents get into trouble because they lack the conviction to tell 
clients the truths they don't want to hear. If a home is overpriced or not 
ready for showing, or if an offer is too low for seller consideration, it's 
the agent's job to speak up with sound advice. In these situations, you 
could get blamed for a poor outcome. You may also run the risk of doing 
all this work and not getting compensated for the time you invested. 

To prepare yourself for the task, flip to Chapter 10, which helps you 
determine and advise sellers regarding a home's ideal price, Chapter 11, 
which helps you counsel clients regarding changes they need to make 
before showing their property, and Chapter 13, which helps you counsel 
clients through the final purchase or sale negotiation. 

f" Troubleshooting. Unavoidably many times as an agent, you have to be 
the bearer of bad news. Market conditions may shift and the price on a 
seller's home may need to come down. A buyer may need to sweeten ini- 
tial offers to gain seller attention. A loan request may be rejected, or, you 
may need to confront sellers because the animal smells in their home 
may be turning buyers away. Or, a home that buyers really wanted may 
end up selling to someone else. 

Chapter 1: Discovering the Skills of a Successful Agent /^ 

At times like these, your calm attitude, solution-oriented approach, and 
strong agent-client relationship will win the day. Chapter 15 is full of 
advice for achieving and maintaining the kind of relationship excellence 
that smoothes your transactions and leads to long-lasting and loyal 


Guiding financial decisions 

When you help clients make real estate decisions, your advice has a long-last- 
ing effect on your clients' financial health and wealth. 

In most cases, home equity is the single largest asset that people own. Your 
ability to guide clients to properties that match their needs and desires, that fit 
within their budgets, and that will give them long-term gain from minimal initial 
investment will impact their financial health and wealth for years to come. 

Your influence as a wealth advisor reaches far beyond clients who are in a 
position to own investment real estate. In your early years, many of your 
clients may be first-time buyers who are taking their first steps into the world 
of major financial transactions. Advise them well and they'll remain clients 
and word-of-mouth ambassadors for years to come. See Chapter 15 for more 
information about keeping clients for life. 


Avoiding the vole of a home 
inventory access provider 

Back in the days of the early 1990s, before the advances of the Internet, the 
consumer's only avenue to information about homes for sale was through a 
real estate agent. Every other week, agents received phonebook-sized period- 
icals presenting information on properties for sale, with each new entry 
accompanied by a small, grainy, black and white picture. 

Today, consumers can go online instead of going to a real estate office to 
launch their real estate searches. With a few keystrokes and mouse clicks, 
they have access to a greatly expanded version of the kind of information 
that agents used to control. However, once consumers discover a home they 
want to see, they must contact either the owner or an agent to gain inside 
access. This is where things get tricky. 

Often a consumer signs off the Web and contacts an agent to get inside the 
home, as if the agent is simply an entry device. As an agent, you need to 
demonstrate special skills to first qualify the consumer's interest and ability 
to buy and then to convert the inquiry into a committed buyer client for your 
business. Chapter 18 gives you ten quick tips to adopt when working with 

/ [1 Part I: Acquiring the Keys to Real Estate Success 

Agents as necessary evils: A mindset 
that comes and goes 

The mindset that agents are overpaid and 
unnecessary to the real estate sale process 
takes hold of consumers every now and then. 
This mindsetgains momentum especially when 
a robust market leads to low home inventories 
and the quick sale of homes that often receive 
multiple offers during the short time they're on 
the market. 

When times are booming, a segment of con- 
sumers and new homebuilders begin to ques- 
tion the value of the agent's services against the 
associated fees. During the best of market 
times, some homebuilders even go so far as 

to sell their houses without allowing agent 
representation — or compensation. 

The silver lining is that when times are good, so 
many properties are moving that the few listings 
affected by the agent-is-unnecessary mindset 
hardly limit opportunity. Plus, booms don't last 
forever. When the market swings back to neu- 
tral, you can betthat competition for buyers will 
again intensify, inventory levels will expand, 
days on the market will lengthen, and sellers — 
including homebuilders — will start courting 
and even listing with agents again. 

Winning Customers 

Imagine you're on the game show, Jeopardy, and you're given seconds to pro- 
vide the most important response of your career. Imagine that you're asked 
to write down the question that prompts the answer: The function that makes 
or breaks a real estate agent's success. (If this book contained music, you 
know what tune would be playing right now.) Okay, time's up. How did you 

The moneymaking reply is: What is creating customers? How did you score? 

Did you answer: What is customer service? If so, you gave the same answer 
that more than 95 percent of new agents give. In fact, more than 90 percent of 
experienced agents don't win points with their answers, either. Only a rare, 
few agents see customer creation as the golden approach that it is. 

Understanding the importance of customer 
creation oVer customer service 

Before you put down this book or send me a note of protest about the title of 
this section, understand this caveat: You have to be excellent at customer 
development and customer service. However, in terms of priority, you have 
to be exemplary at client creation. Following are a few reasons: 

Chapter 1: Discovering the Skills of a Successful Agent /J 


is* You can't serve customers if you don't create customers in the first 
place. And because customer service excellence results from customer 
service experience, customer development is a necessary prerequisite 
to outstanding customer service. 

i<* Most consumers have been provided such poor service that their 
expectations are remarkably low. When service providers do what they 
said they'd do in the time frame that they agreed to do it, consumers are 
generally content with the service they receive. Certainly you want to 
develop the kind of expertise that delivers exemplary outstanding ser- 
vice, but if you commit, from the get-go, to do what you said you'd do 
when you said you'd do it, your delivery will be better than most. 

i^ Between creating customers and delivering service, customer creation 
is the more complex task. Customer creation requires sales skills and 
ongoing, consistent, and persistent prospecting for clients. To develop 
customers, you have to gain the level of skill and comfort necessary to 
pick up the phone and call people you know (or even people you don't 
know) to ask them for the opportunity to do business with them or to 
refer you to others who may be in the market for your service. 

*<* If you attract the right kinds of customers into your business, your 
clients will match well with your expertise and abilities, and service 
will become an easier and more natural offering. If you attract the 
right type of customers, you'll also reap greater quantity and quality of 

is* The only alternative to devoting your time and energy to customer 
development is to guide people to your Web site, office, or phone line 
through costly advertising and promotional programs. This approach 
requires a lot of money and often generates low-quality and reduced-profit 
leads and a long sales cycle. Because this is hardly an effective formula to 
get a newer agent up and running in a hurry, I don't recommend it. 


Developing sates ability to Win customers 

The single most important skill for a real estate agent is sales ability, and 
sales ability is how you win customers. Your sales ability is based on how 
effective you are in generating prospects, following up on those prospects to 
secure appointments, qualifying those appointments, conducting the 
appointments to secure an exclusive agency contract, and then providing ser- 
vice to that recently created client. People also base your ability on how 
quickly you can accomplish all this. 

Because you're holding this book, I'm willing to bet that you've either just 
come out of training to receive your real estate license or you're in the early 
days of your career. In either case, decide right now to master the skills of 
selling in order to fuel your success. 


Part I: Acquiring the Keys to Real Estate Success 

It's hard to believe that probably 95 percent of agents lack top-level sales 
skills. In my career in training and coaching, I've met tens of thousands of 
agents. Very few, even at the top echelon of earnings, have had any formal- 
ized sales training. Whenever I speak to agents, I always ask the audience 
how many have taken any formalized sales training, and I usually see only a 
few hands out of the hundreds in the room. 

The other reason I know sales skills are lacking is because I coach some of 
the best and highest-earning agents in the world, and even they believe their 
sales skills can use improvement. Many agents tape their prospecting ses- 
sions or listing presentations, but I have yet to meet one who feels that 
they've nailed their sales skills. The difference between these high-earning 
agents and other agents is that the high-earning agents realize that sales 
skills are vital to success and they continuously seek excellence in this area. 

To follow the high-earning agent's example, make it your priority to develop 
and constantly improve your sales skills for the following reasons: 

i** To secure appointments. Chapter 5 provides practically everything you 
need to know about winning leads and appointments through prospect- 
ing and follow-up activities. 

i** To persuade expired and for-sale-by-owner listings to move their prop- 
erties to your business. Chapter 7 is full of secrets and tips to follow as 
you pursue this lucrative and largely untouched field. 

i^ To make persuasive presentations that result in positive buying deci- 
sions. Chapter 9 helps you with every step from prequalifying prospects 
to planning your presentation. It's packed with tips for perfecting your 
skills, addressing and overcoming objections, and ending with a logical 
and successful close. 

Gaining customers no matter 
the market conditions 

According to the National Association of Realtors, over half of current real 
estate agents have been in the business less than three years. That means 
more than one out of two of today's agents (probably including you) have 
never experienced a marketplace where homes sat on the market for 60, 90, 
or 120 days, where agents faced stiff competition to move listings, and where 
it took real work to find and create client leads. 


In robust market conditions, leads are abundant and relatively easy to 
attract, especially buyer leads. But when the market slows, as it inevitably 
will, real estate success becomes less automatic. Only great sales skills guar- 
antee that you — instead of some other agent — will win clients no matter 
the market conditions. The best agents make more money in a challenging 
market than they do in a robust market. 

Chapter 1: Discovering the Skills of a Successful Agent / / 


Regardless of economics, every market contains real estate buyers and sell- 
ers. No matter how slow the economy, people always need and want to 
change homes. Babies are born. Managers get transferred. Couples get mar- 
ried. People divorce. And with these transitions, real estate opportunities 
arise for those with the best sales skills. 

The way to build immunity to shifting market conditions is to arm yourself 
with skills in prospecting, lead follow-up, presentations, objection handling, 
and closing. The information in Part II of this book guides you to success. 

Becoming a Listing Agent 


In real estate, there's a saying that "you list to last." In your early days, you're 
likely to build your business by working primarily with buyers. But in time, 
you begin to develop your own listings, and following that you begin your 
climb to real estate's pinnacle position, which is that of a listing agent. 

To create long-term success, a high quality of life, and a strong real estate 
business, set as your goal to eventually join the elite group — comprised of 
fewer than 10 percent of all agents — who are listing agents. The advantages 
are many: 

u* Multiple streams of income. Listings generate interest and trigger addi- 
tional transactions. Almost the minute you announce your listing by 
putting a sign in the ground, you'll start receiving calls from neighbors, 
drive-by traffic, and people wanting to live in the area. These calls repre- 
sent current and future business opportunities that only arise when you 
have a listing with your name on it. 

*«" Promotional opportunity. A listing gives you a reason to advertise and 
draw the attention of prospects that you can convert to clients or future 
prospects. And when your listing sells, you can spread the word of your 
success with another round of communication to those in the neighbor- 
hood and throughout your sphere of influence. 

u* A business multiplier. Talk to any listing agent and you'll have this fact 
confirmed: One listing equals more than one sale. 

On average, over the course of my career, every listing I took resulted in 
1.68 closed sales as a result of additional business generated by ad calls, 
sign calls, and the fact that the listing seller wanted to buy another 
home. In other words, I won more business than I offered for sale. 

If you gave your financial adviser a single dollar and in a few months you 
received the dollar back with an additional 68 cents, you'd do back flips. 
In fact, you'd probably be rifling through sofa cushions looking for addi- 
tional dimes and dollars to send toward similar investments. And that's 

/ Q Part I: Acquiring the Keys to Real Estate Success 

the same motivation that propels the best agents into the field of list- 
ings. The multipliers vary by agent, but they always result in a pretty 
impressive return on investment. 

*«* A free team of agents working for you. The moment you post your list- 
ing, all the other agents in your area will go to work on your behalf. And 
the best part is they don't require payment until they deliver a buyer, 
and then they'll be paid not by you but by your seller through the com- 
mission structure. 

Much of the information in this book focuses on developing listings, because 
to achieve top-level success listings are the name of the game. 

Pathways to Success: 
Which Witt \lou lake) 

Agents typically follow one of these four basic approaches in the quest to 
achieve real estate success: 

v* Become a workaholic. More than 80 percent of agents who generate a 
reasonable income achieve their success by turning their careers into a 
seven-day-a-week, 24-hour-a-day job. They answer business phone calls 
day and night, they make themselves constantly available to prospects 
and clients, and they work on-demand with no restraints. 

V Buy clients. The second-most frequent pathway to success is to buy 
business through massive marketing campaigns. Some agents buy or 
brand their way to top-level real estate by investing in billboards and 
bus benches with their names and faces on them, thousands of direct 
mailers, expensive ad schedules, and all kinds of promotions. Others 
buy their way to the top by discounting their commissions. By offering 
themselves at the lowest prices, these agents eliminate the need to 
emphasize their skills, abilities, and expertise. 

v* Take the shady road. Another avenue to real estate financial success is 
to abandon ethics and just go for the deal and the resulting money. 
Unlike the vast majority of agents who advise and advocate for their 
clients, agents who take this route choose not to be bound by ethics or 
any codes of conduct. They put their own needs first and put their 
clients' best interests in distant second place. Fortunately, these agents 
are few and far between. 


Chapter 1: Discovering the Skills of a Successful Agent / y 

Mining gold from your professional 
services business 

The best professionals provide ongoing ser- 
vices to clients who wouldn't think of taking 
their business elsewhere. These professionals 
develop reputations and client loyalty that 
reside in their company names, even after the 
founding professionals move on to other ven- 
tures or into retirement. Doing more than just 
earning an income and building a clientele, 
these professionals build an assetthatthey can 
sell, which allows them to receive compensa- 
tion from the value of the successful businesses 
they've built. 

As a favorite example, my father was a dentist 
for 30 years. When he decided to retire, he sold 
his practice to another dentist. He sold his build- 
ing and equipment, but most importantly, he sold 
his patient roster, which raked in the majority of 
the money he received. 

A real estate agent who builds a well-rounded, 
successful business can enjoy a similarly lucra- 
tive sale. In fact, your objective should be to 
build the kind of business that you can sell at the 
completion of your real estate career. 

I worked with a coaching client a few years ago 
as she prepared her business for sale. She 
tracked lead-making strategies, lead conver- 
sion rates, client satisfaction, listings, buyers, 
and net profit. Then for two years, we worked 
together to improve all the facets of her busi- 
ness until they were fine-tuned to perfection. 
She was among the minority 5 percent of all 
agents who built a truly well-rounded business. 
The result: Her real estate practice sold for well 
over$1 million. How's that for a goal? 


v* Build a professional services business. The fourth and best pathway is 
to create a well-rounded, professional services business not unlike that 
of a doctor, a dentist, an attorney, or an accountant. Fewer than 5 per- 
cent of all agents follow this route, yet the ones that do are the ones who 
earn the largest sums of money — some exceeding $1 million annually 
while also having high-quality lives and time for friends and family. Plus, 
when they're ready to bow out of the industry, they have a business 
asset they can sell to another agent. (See the upcoming sidebar, "Mining 
gold from your professional services business," for more details on cre- 
ating an asset you can sell.) 

This is the route I urge you to follow. Each of the following chapters in 
this book tells you exactly how to build your own professional services 

2(/ Part I: Acquiring the Keys to Real Estate Success 

Chapter 2 

Residential versus Commercial: 

Deciding Which Type of Real 

Estate Is Right for You 

In This Chapter 

Differentiating between commercial and residential real estate specialties 
Understanding the risks and rewards in each field 
Choosing the right specialty for you 

7 he worlds of residential and commercial real estate agents are as different 
as night and day. Each arena offers its own set of opportunities, advan- 
tages, and challenges. Surprisingly, you find little overlap in terms of the 
types of clients served, the emotional involvement of buyers, the sales 
process, and the real estate agent's financial return against time invested. 

Count on the info in this chapter to help you sort through the differences and 
decide on the real estate field that best matches your personal goals for 
career advancement, income, wealth, challenge, and overall opportunity. 

Sizing Up the Differences between 
Residential and Commercial Agents 

SJ>OTf When I decided to become a real estate agent in 1990, 1 didn't even consider 

residential real estate sales as a career path. I wanted to wear the nice suits, 
drive the fancy cars, and meet over power lunches with those who made the 
business world turn. I wanted to sell and lease commercial real estate. 

w£ w£ Part I: Acquiring the Keys to Real Estate Success 

Fortunately, I called a long-time friend, Kerry Gilbert, who at the time was one 
of the most successful commercial agents in my market area of Portland, 
Oregon. He listened to my aspirations and responded with candid advice 
about the direction I'd chosen. He gave it to me straight then, and I give it to 
you straight now. 

Of all the wisdom he shared with me that day, one thing he said really stuck 
in my mind: "Making $100,000 a year is easiest in the arena of residential real 
estate. In fact, you can reach that goal in your first year." He'd been there and 
done it all — residential real estate, commercial real estate, and land develop- 
ment. Independently or through syndications or joint ventures, he'd had a 
personal stake in every facet of commercial real estate including sales of 
retail buildings, apartments, undeveloped land, and office and industrial 
spaces. He knew the game from firsthand experience and I knew he was 
speaking the truth. I followed his words and broke into the residential arena. 
The following information helps you weigh your options and make a decision 
for yourself. 


Comparing commercial and residential 
real estate: It's apples to oranges 

Comparing commercial real estate to residential real estate is like comparing 
apples to oranges. Both are from the same genre, but that is where the simi- 
larities end. The following are general descriptions of the two types of real 

*<" Commercial real estate is business-focused. It involves property that is 
sold, leased, or used to achieve a predetermined business objective. It's 
used as an investment to achieve an anticipated rate of return on the 
funds invested. 

is* Residential real estate revolves around the wants and needs of a 
homeowner and his family. It involves property purchased for individ- 
ual use, most often to provide housing for families. 

The selling process for commercial real estate hinges on numbers and return- 
on-investment calculations. Residential real estate is nowhere near so cut- 
and-dried because it's more of an emotional purchase. Many buyers make 
decisions based on the fact that the house just feels right to them. I've sold 
homes to people who insisted they needed a fourth bedroom, an island 
kitchen, a family room off the kitchen, or a three-car garage. Yet when they 
fell in love with a home that lacked their must-have amenities, they pur- 
chased anyway and were thrilled with the decision. In commercial real estate, 
however, feelings and emotions account for little in the purchase. The key 
factor is the return on investment. 

Chapter 2: Deciding Which Type of Real Estate Is Right for You £j 


What is residential real estate) 

Residential real estate is focused on personal use. For the most part, residen- 
tial agent's represent the buyers or sellers of single family, primary homes. 
Within the residential real estate arena, agents also engage in the following 

U* Selling secondary homes to people seeking a "home-away-from-home" 
to get away from it all. The second home market is one of the fastest- 
growing segments of the residential real estate arena. More than 21 per- 
cent of the sales in 2004 were second home purchases for use by the 
purchaser or for investment purposes. 

i^ Working exclusively for a builder of new homes, usually by serving as 
the on-site salesperson for a new home community. In this role, the 
agent sells only the builder's homes. If buyers need to sell an existing 
home outside of that community, usually another agent handles that sale. 

is* Representing residential real estate investors who are looking to 
increase wealth through the ownership of homes, duplexes, triplexes, 
and fourplexes. Small-scale multiplexes are handled by residential 
rather than commercial agents for the following two reasons: 

• Often the purchaser lives in one segment of the multiplex, creating 
a residence as well as an investment property. 

• Usually a purchaser can buy up to a fourplex with a conventional 

Residential agents rarely represent buyers or sellers of multiplexes with 
more than four dwelling units. Purchasers of larger complexes must 
qualify for and secure commercial real estate loans — which involve a 
more restrictive set of conditions, including higher interest rates, 
shorter amortization schedules, and considerably higher initial equity 
positions or down payments. 

What is commercial real estate? 

Commercial real estate centers on business or investment use of real estate. 


In commercial real estate, you can buy, sell, lease as a lessor (the person who 
owns the property for lease), lease as a lessee (the person who's trying to 
lease the property for their use), syndicate, joint venture, develop, option, 
and invest in a wide range of commercial real estate categories, including 
retail, office, industrial, apartments, investments, and raw-land leasing. 

Commercial real estate agents are usually familiar with many of the commer- 
cial real estate areas, but they generally specialize in one of the following 
areas or disciplines: 

£ll Part I: Acquiring the Keys to Real Estate Success 

t-" Representing tenants or lessees by finding, selecting, and negotiating 
new space for client businesses. 

w* Representing building owners or lessors by working to lease out build- 
ing space for the highest possible price and with the most favorable 
terms. Frequently a commercial agent represents one owner or even one 
building exclusively in order to ensure the building is leased to capacity. 

*<* Representing investors who want to buy and sell commercial property 
by finding opportunities that offer the lowest risk to the client, the best 
return on investment, and the best capitalization rate, which is the net 
operating income of the property divided by the sales price or value of 
the property. 

Weiqhinq advantages and disadvantages 

Before you launch your career in residential or commercial real estate, you 
need to objectively weigh the pros and cons against your own goals and 
interests. Making a U-turn after the wrong initial selection could take at least 
one year. The upcoming sections help you view the two paths with an objec- 
tive eye, without getting wrapped up in the excitement of either. 

Exploring the pros and cons of a commercial real estate specialty 

Landing a job at a commercial brokerage house is much like being hired into 
a Fortune 500 company. Expect to attend a series of interviews, answer a 
number of questions about your history and educational background, and 
endure a careful assessment of your ability to succeed in the field. Once you 
land a job, most commercial real estate companies pay you a salary while 
you cut your teeth in your new career. They want you to succeed, and they 
stake a monetary investment in your success. 

The pros 

Commercial agents work in a far more respected business environment than 
that of residential agents. They're part of the circle of movers and shakers in 
their towns or cities. They present a polished and positive image and dress 
for success in power suits. And, compared to residential agents, they're held 
in higher regard by their prospects and clients. Following are some of the 
many positive aspects of a commercial real estate specialty: 

v* You join an elite group. Expect to find fewer real estate companies and 
fewer job openings in the commercial field than in the residential arena. 
The good news is that when you land a job, you encounter fewer people 
to compete against. 

Chapter 2: Deciding Which Type of Real Estate Is Right for You £j 


is* You benefit from a professional, well-managed environment. I believe 
that most commercial real estate companies are managed more effec- 
tively than residential real estate companies. Because of this effective 
management, you benefit from the following distinct advantages: 

• Smaller staff size. While a residential office may have 150 to 200 
full- and part-time agents, most commercial offices range in size 
from a few people to 50 agents, all of whom work full time as seri- 
ous professionals in the field. Fewer agents translates to fewer neg- 
ative interpersonal issues and more time that managers can invest 
in training and coaching new agents. 

• Training and performance monitoring. Commercial brokers treat 
new agents like long-time employees by requiring performance of 
certain tasks or activities within a specific time frame, holding 
agents accountable, and monitoring sales outcomes. As a result, 
new agents continually improve their skills and expertise. 

• Support staff. Most commercial brokerages have a larger support 
staff than residential companies, which fortunately provides more 
administrative assistance to agents. 

• Research services. Most large commercial brokerages include 
research departments that monitor every influence on the local 
and national market, including jobs, economic conditions, business 
expansion, and investment trends. The research departments also 
produce reports on inventory of properties, sales, tenants, absorp- 
tion rates, and marketplace activity, which provides you with 
advanced tools to position yourself as the expert. 

is* You work with in-house listings. Commercial brokerages sign contracts 
with local, national, or international companies to represent their real 
estate interests. The brokerages may serve as the exclusive tenant rep- 
resentative for a company, as the exclusive listing agent for an investor 
who owns multiple buildings, as the exclusive leasing agent for a major 
building, or as the representative of a major firm's real estate interests 
nationwide or even worldwide. 

As a newer agent, you may be assigned to serve as your company's 
junior representative. As a junior representative, you work alongside one 
of the best salespeople in your firm. Your job is to help the salesperson 
represent a client — and likely it will be a client that you never would 
have been able to land on your own. This experience provides you with 
a tremendous opportunity to explore the field while earning a stable 

*«* You earn larger commission checks. On average, commercial brokers 
earn larger commission checks per transaction than their residential 
counterparts. Sometimes, a commercial broker earns a six-figure income 
from a single transaction. This is due to the size of the transaction sales 
amounts, which can top $5 million. 


Part I: Acquiring the Keys to Real Estate Success 

Balancing the best and worst of real estate sales 

If you're like most people who go into real estate 
sales, you want to be an independent contrac- 
tor with the freedom to choose your path, des- 
tiny, and income. That's one of the best things 
about real estate sales: No one can tell you 
what to do, how to do it, or when to do it. 

The flip side of that same truth is one of the 
worst things about real estate sales: No one 
can tell you what to do, how to do it, or when to 
do it — except in commercial real estate where 
most new agents work against clearly defined 
performance standards with consistent moni- 
toring that leads almost directly to dramatic 
increases in the probability of success. 

Performance management experts cite two 
well-known adages: "When performance is 
measured, performance improves," and "When 
performance is measured and reported, perfor- 
mance improves faster." The training you'll 
receive as a new commercial agent works to 
your benefit on both fronts. Your performance 
will be measured, your progress will be 

reported, and you will learn and change your 
approaches in response. 

In my company. Real Estate Champions, we 
require members of our sales staff to make a 
certain number of sales calls on the phone each 
day. We also require a predetermined number 
of presentations daily and weekly. And each 
person is required to make a specific number 
of sales. Weekly, all sales staff members hand 
in to the sales manager a tape of their calls, 
contacts, and presentations to show that they 
have complied with the minimum standards of 
activities, monitoring, and results. No ifs, ands, 
or buts. 

Tackling the worst thing about real estate sales 
— forcing yourself to do what you should do 
even when you don't feel like doing it — will 
deliver the best thing about real estate sales: 
personal and economic freedom. If you go into 
commercial real estate, your managerwill help 
you define whatto do, how to do it, and when to 
do it. If you go into residential sales, be ready to 
set and monitor your own high objectives. 


u* You can earn a large income without selling a thing. Commercial real 
estate affords an agent many ways to receive compensation without ever 
selling property. The most common specialty is to become a leasing 
agent, where you represent a lessor over an extended period of time. In 
most commercial leases, the tenant terms and conditions cover a series 
of years with monthly payments escalating at predetermined points 
along the way. When the lessee and lessor extend or renew the lease, the 
original agreement stipulates that the commercial agent earns a commis- 
sion for the next contract period, with no new "sale" necessary. 

In commercial real estate sales transactions, the listing agent receives 
only the revenue from the purchase commission. The selling agent, how- 
ever, receives not only the sale commission revenue but also the inside 
track to represent the new owner in tenant negotiations, which can 
deliver lease commissions for years to come. 

u* You work normal business hours. Commercial clients are leaders who 
generally conduct business on a 9-to-5, Monday-through-Friday sched- 
ule. Commercial real estate agents rarely find themselves working on 
evenings or weekends. 

Chapter 2: Deciding Which Type of Real Estate Is Right for You J? / 





Based on the preceding section, you must think that commercial real estate 
sounds pretty terrific: You get treated better, earn larger fees, get a base 
salary from day one, and receive repeated payments well into the future for 
relationships you created years ago. 

But you find downsides to the commercial real estate business, too. 
Following are a few realities to consider: 

**" Commercial real estate is a risky environment. As a commercial real 
estate agent, your exposure to marketplace and economic swings, on 
top of the pressure you feel to get space leased or sold, knows no com- 
parison in the residential world. A building owner with a 50 percent 
vacancy rate may lose tens of thousands of dollars each month. 
Generally speaking, when such a situation continues for a few months, 
you can expect the owner to demand performance, now! 

u* The marketplace can change rapidly. A national or regional economic 
slowdown, or even a softening at the local level, can trigger dramatic 
market swings that negatively affect commercial agents and their clients. 

An economic sector may slow down and flood your market with com- 
mercial space. A large company may close or move, driving excess office 
space onto the market. Or, new space may even come onto the market at 
the same time the economy is slowing, resulting in a tough environment 
of overbuilt sectors and tons of losses and falling values. 

i* Maintaining control of the deal can be a struggle. Commercial clients, 
as a whole, aren't very controllable. The people who own buildings, fac- 
tories, industrial sites, flex space, and retail strip malls are high powered 
and are most comfortable when in control. In most cases, they're 
shrewd investors who are attracted to a deal based on its value and 
income potential, with little, if any, emotion involved. They don't really 
care who brings them the deal and whether it is served on a silver plat- 
ter. They just want the deal. This "just the facts ma'am" approach 
doesn't breed loyalty on anyone's part. 

Commercial clients also know that large commission checks result from 
their transactions with the agents. Never mind that the agents may work 
months or even years to earn that commission or that they may not 
have received a commission check over the last six months. To many 
investors the commission simply represents a large line item in the cost 
of the sale, and in the offer and acceptance process they aren't shy 
about asking the agent to reduce the commission percentage. 

*«* Budget skills are essential. Commercial real estate commission checks 
arrive only sporadically. To offset the gap, you need strong money man- 
agement ability, including the discipline to store up commission income 
since it may be several months before the next check comes through. 

28 P art ' : Acquiring the Keys to Real Estate Success 


is* Don't count on much independence. Compared to residential agents, 
commercial agents have a lot less independence in deciding which 
market they'll work in. Your commercial brokerage company generally 
assigns you to a market sector. Whether you end up in retail, invest- 
ments, apartments, industrial, or office leasing depends on your com- 
pany's needs. Wherever they have an opening is where you're going to 
be sent. 

*<* Commission splits are weighted toward commercial brokerage compa- 
nies. The standard fee split arrangement generally divides commercial 
commission revenue on a 50/50 basis between the brokerage and the 
agent. However, when you're working on a company account as a new 
agent, your portion is usually less than half. This split makes sense 
because you're still training and because you didn't secure the relation- 
ship or the deal, but rather had it handed to you (along with a base salary 
and company-provided administrative support and research assistance). 

However, once you're a trained agent, the 50/50 arrangement doesn't 
change as drastically as it can in the residential arena. 

v* You construct your own database. Commercial real estate is a database 
business. For example, in office leasing you have to create a database of 
all the buildings in the marketplace and all the information about the 
buildings: Tenant lists, when leases are up, building features and ameni- 
ties, ownership information (whether owned by an individual, a com- 
pany, an insurance trust, or a real estate investment trust), and owner 
contact information. Unearthing this information takes considerable 
time — imagine what's involved just to find the decision-maker of a 
building owned by a distant company or trust. 

Brokerages don't provide this collection of information, and most com- 
mercial agents don't share information even within their own company. 
You're left to construct your database on your own, which takes large 
bites of time out of your calendar. 

*<* Acquiring what you're selling can be difficult. Even if you could afford 
it (see the next bulleted item in this list for more on the sky-high eco- 
nomic threshold), large brokerage companies don't want you to buy the 
commercial real estate you're selling. They believe that doing so could 
create a conflict of interest with their best clients, to whom they have a 
fiduciary responsibility to present the best opportunities. 

*«* Commercial clients are few and far between. In most large market 
areas, the commercial real estate arena usually only involves large insti- 
tutional investors or extremely wealthy individuals. I believe that a 
person must be at least a deca-millionaire to enter today's commercial 
ownership game on a large scale. 

Sure, small business owners can buy the buildings they occupy, but for 
them to go beyond that in today's marketplace is largely outside the 
realm of possibility. The marketplace was vastly different 10, 15, or even 
25 years ago. Back then, commercial real estate was an open playing 
field. But today it's hardly a place for what I call little guy investors. 

Chapter 2: Deciding Which Type of Real Estate Is Right for You £y 


Pros and cons of a residential real estate specialty 

Let me own up to a personal bias: I firmly believe that while commercial real 
estate is a wonderful business opportunity, you find more and better benefits 
in residential real estate. Even though getting there wasn't entirely my own 
choice, I spent my whole career in this arena. 

Originally I set out to become a commercial agent, interviewing with 
Portland's big firms, including CB Richard Ellis, Coldwell Banker Commercial, 
Grubb & Ellis, and Cushman & Wakefield. I thought I was close at Cushman & 
Wakefield but didn't get a job offer. I called the manager back several times a 
week for weeks on end until he gave me a final brushoff — a fact that I now 
look back on and laugh at . . . all the way to the bank. I ended up making more 
money in residential real estate than 99 percent of those in commercial real 

The pros 

The favorable aspects of residential real estate stack into four main cate- 
gories. Following is a look at these categories and how each gives an edge to 
the residential real estate agent: 


i^ Low risks and high gains. While other business owners have to buy 
equipment, sign leases for space, amass costly inventory, and develop, 
build, and market products, a residential agent needs only a computer, 
contact management and MLS software, a high-speed internet connec- 
tion, a phone line, a reliable car, and a stack of business cards. 

Compared to the thousands (or hundreds of thousands) of dollars that 
other businesses risk before they even open their doors, a residential 
agent risks little, yet has the opportunity to make hundreds of thou- 
sands of dollars a year. 

Today's agents add Web sites, marketing pieces, and many other sup- 
port documents to help fuel their success, but I can tell you from experi- 
ence that with little more than the initial list, I made over $100,000 in my 
first full year in the business. 

I can also tell you that within the real estate arena, the relatively low 
volatility of the market is another huge benefit for residential agents. 
Volatility is the large swinging in property values and in buying and sell- 
ing activity. Unlike in commercial real estate, market swings are driven 
more by inventory levels than by economic factors. Houses are sold pri- 
marily to the people who will be living in them. Regardless of the econ- 
omy, they need somewhere to live. Even if homes decline in value, 
homeowners aren't likely to walk away from their homes and lose their 
investment value. This low volatility of the residential real estate market 
helps soften the effects of market swings and also reduces risk. 

j(/ Part I: Acquiring the Keys to Real Estate Success 

Wanna make $100,000 in residential real estate? 

Anyone can make a bundle in residential real 
estate. I truly believe that and say it every time 
I speak to a group of new agents. I add this 
caveat here: If you work hard, apply the tech- 
niques in this book, and follow these four rules 
of real estate success, you will make $100,000 
a year. 

1. Show up. To achieve success, show up, and 
show up early. Show up consistently to do 
the activities that create revenue. Put in 
enough hours to achieve success. The vast 
majority of people never show up. You can't 
expect to make $100,000 a year in a new 
career by working 10 hours a week. 

2. Focus mentally. When it's time to do 
prospecting or lead follow-up, focus intently 
on the outcome you desire and then take 
action. Do it — and then prepare to do it 
even better. Don't make the mistake of all 
those who fall short of their goals and who 
stop reading and learning when they com- 
plete their formal educations. Continuously 
improve your skills, your personal philoso- 
phy, your ability to focus, and your intent to 

Tell the truth. Tell the truth to a seller who 
wants to overprice a property. Tell the truth 
to a buyer who wants a purchase price that 
doesn't exist. When you need to "get real," 
it's better to have the honest and frank dis- 
cussion as early as possible. 

Don't be attached to the outcome. Don't let 
yourself get derailed for hours, days, or 
even weeks because of some negative 
event. Maybe buyers you thought were 
loyal to you buy with someone else. Or, per- 
haps a pending transaction you were 
counting on goes up in flames and CPR 
won't even bring it back. Then, out of 
nowhere, you lose a listing when you 
thought the seller was working with you. 
Welcome to the game of real estate. Play it 
long enough and expose yourself to enough 
transactions, and these events, plus plenty 
of others, are sure to happen. When they 
do, just scream at the top of your lungs a 
good four-letter word: NEXT! 

is* Tremendous opportunity. As a residential agent, you can profit in a 
number of ways. First, of course, you can list and sell houses. No matter 
what market conditions are present in your marketplace, some people 
always want to buy and sell. For example, your marketplace could be 
declining in value, but people would still be buying and selling in the 
area. Beyond that, you can reap benefits from the following avenues: 

• Residential agents have easy access to lucrative investment 
opportunities. Many of these opportunities are available with lim- 
ited or even no money down. I know many agents who secured 
good properties by using the resulting commission check as the 
down payment. With a little time and effort, you can easily find and 
finance residential deals from single-family homes to fourplexes. 

If I had a dime for every time someone has said to me, "If you can 
find me a really good deal, I'll buy it," I could buy a few good deals 
with the proceeds. What they're really saying is that if you find a 

Chapter 2: Deciding Which Type of Real Estate Is Right for You j J 


property for $50,000 below market they'll buy it — as if they're 
doing you a favor by giving you a chance to earn a commission 

The fact is that if you find a property priced $50,000 below market, 
as an agent you can buy it yourself. Residential real estate affords 
you the opportunity and the access to make those kinds of deals 

• You can leverage your efforts. As a residential agent you really 
aren't a one-person team. You're an economic engine. Fortunately, I 
adopted this philosophy early in my career. By becoming a listing 
agent, I, in effect, could hire the 6,000 other licensed residential 
agents in Portland, Oregon, to work for me on a contingency basis 
at no risk to my business. For example, they would show my list- 
ings to prospective buyers and I didn't have to split my fee or pay 
them until the sale closed and I calculated the commission. 

During a typical transaction, you spend far less time with a seller 
than with a buyer. That's why many of the most successful agents 
leverage their efforts by working with buyers' agents rather than 
working directly with buyers. 

Another easy way to leverage your efforts is to hire an assistant to 
handle administrative tasks so you can invest a greater portion of 
your time in prospecting, lead follow-up, and other sales functions. 

• As you earn more, your commission splits increase, as well. In 

your early years as an agent, expect an agent/company commis- 
sion split arrangement somewhere in the neighborhood of 50/50, 
based on your experience and production and the services that 
your company provides. 

Once you become a seasoned agent, a good thing just keeps get- 
ting better. As your production increases, so does your portion of 
the commission. When you're able to produce income on your own 
without company floor time, company leads, and company open 
houses, your company may offer 90 percent or 100 percent com- 
mission options. In return, the best producers pay a monthly flat 
fee to the real estate company. 

• Successful residential agents actually build and run a business. 

As a successful residential agent you handle sales and marketing, 
leadership of people, vision casting, financial management, and all 
other aspects of small business management. 

• You can build and sell your practice. When doctors, dentists, 
accountants, attorneys, or other professionals retire, they sell their 
practices (basically their clients) to other professionals. Then they 
work jointly over a six-month or yearlong transition period turning 
over the reins and bowing out of the business. Residential agents 
can follow the same track. 

3^" ^ art '" Acquiring the Keys to Real Estate Success 

Over the last few years, a number of my clients have sold their 
practices for substantial amounts of money. They had built strong 
businesses and quantified their production, gross commission 
income, and net profit over a period of years. They could show 
prospective purchasers exactly where and how they generated 
prospects and sales, and they could prove what their businesses 
were worth in terms of revenue and profit. 

*«* A readily accessible clientele. Unlike commercial agents, who have to 
construct databases, do research, and invest considerable effort to find 
people who may want their services, residential real estate offers a large 
and ready pool of prospects. In fact, almost anyone could be a prospect 
for home ownership. However, the key word in that sentence is could. 
See Chapter 5 for a look at who is and who isn't a likely prospect, and 
how to reach those who are. 

Here are some tips for gaining prospects: 

• As a start, you can work with people you already know, which 
makes finding new clients in the early stages of your career more 

• You can attract prospects via ads, Internet sites, and open houses. 
(See Chapter 8 for open house information and Chapter 12 for mar- 
keting advice.) 

• You can work to win the listings of homes currently (and unsuc- 
cessfully) for sale by owners. As a mentor early in my real estate 
career said, "All you have to do is open up the Sunday newspaper 
and you find a whole lot of prospects. All you need is enough guts 
to call them." He was right. Most homes being sold directly by 
owners are advertised in the Sunday paper and are grouped 
together with prominently presented phone numbers staring right 
at you. No searching required. 

• You can convert expired listings to new listings for your business. 
To find expired listings, pull up information on the MLS service 

• You can also conduct title only searches to find contact informa- 
tion for absentee owners, owners in specific neighborhoods, or 
people who have owned in an area for three, five, or seven years, 
who may be ready to reenter the real estate marketplace as buyers 
or sellers. 

The residential real estate agent's ability to have a constant stream of new 
prospects to work with is like no other sales industry or sales profession. 

*<* It's wonderfully lonely at the top. When it comes to competition in resi- 
dential real estate, success-minded individuals find the field close to 
wide open. If you want to conduct a competitive analysis, the best place 
to start is by looking in your own mirror. I've always felt that I was my 
only competition. No one was preventing me from achieving my listing, 
sales, or income goals except for me. 

Chapter 2: Deciding Which Type of Real Estate Is Right for You 33 


The vast majority of agents survive only in positive market conditions. 
When market activity swings to neutral, the exodus begins and only the 
serious professionals remain. 

The road to the pinnacle of residential real estate success is open and 
definitely worth driving. As a residential real estate agent you can earn 
more than the highest paid surgeon. I have a handful of coaching clients 
who now earn more than $1 million a year. You read that correctly: one 
million dollars. You won't find many other professions where someone 
who didn't finish college has the unlimited opportunity to make $1 mil- 
lion a year. All you have to do is commit to continuously improving your 
skills, abilities, knowledge, organization, and systems over where they 
were last year, last quarter, last month, and even last week. 

The cons 

By now you may think that I'm so obviously sold on the benefits of a residen- 
tial real estate career that I can't render an objective opinion about the field's 
negative aspects. This section proves otherwise. I've packed it with truths 
you need to know about the residential real estate work environment, profes- 
sionalism, and work hours. Here are some cons to consider: 

u* A distracting work environment. You may hear the work environment 
of many real estate offices described as chaotic, emotional, and in some 
cases toxic. Nice, huh? 

As a result, more and more agents work from their homes. They use 
company offices to meet clients but conduct day-to-day activities in self- 
contained home office biospheres that leave the distractions of a typical 
real estate office behind. 

As a newer agent, you may be required to work out of the company 
office initially. However, you benefit from access to your broker or man- 
ager, and you have the opportunity to train with the other agents. 

When in the company office, watch for these three major problem areas: 

• Beware of the bullpen. The bullpen is the large work area in the 
center of a real estate office that's filled with little cubicles where 
new or low-producing agents work. Each workspace is reminiscent 
of the desklike carrels in an elementary school library. Since most 
agents aren't the size of third graders anymore, working with their 
knees at their chins has proven to be quite the challenge. 

Within the bullpen, walls reach only high enough to block views 
when a person is seated. They provide only minimal privacy and 
dull practically no noise, which makes focusing on tasks extremely 
difficult. It's particularly challenging to place outbound sales calls, 
your most important task each day, when you have other conver- 
sations happening around you. 

jU P art I: Acquiring the Keys to Real Estate Success 

• Beware of the coffee and doughnut bunch. You won't have to 
look hard to find this group in any real estate office. They're more 
interested in the social restructuring of the real estate office than 
in sales, and they're always seeking new members. Their mission is 
to solve the world's problems and, if they have time, sell a few 
homes. Talk to any one of them (if you dare!) and you hear that the 
next big deal is right around the corner if: the market would 
improve; this fickle buyer would just buy; my deal (as in my one 
and only deal) would close; the company would do more for its 
agents; and on and on. They carry around a laundry list of prob- 
lems and issues that block their success, and they're always happy 
to share them with you, at length. 

It's easy to get sucked into their black hole because they want you 
in their group and you, as a new agent, want to build relationships. 
On the surface, they also seem to know what they're talking about 
because they often cite their years of experience. The problem is 
that an eight-year agent in this group likely has one year of true 
experience, repeated eight times. 

• Beware of the open-door policy. Some companies still allow 
anyone to wander in: mortgage originators, escrow officers, title 
representatives, termite inspectors, home inspectors, ad salespeo- 
ple, Web site developers, and closing gift catalog purveyors. 

Opening the doors to everyone results in a constant stream of 
people trying to sell you something. They're all working to win 
your business while it's still early in your career, and they won't 
stop trying to maintain it for years to come. (This principle of early 
loyalty comes straight out of the credit card industry playbook: 
Why else would college-age individuals receive more credit card 
offers than the rest of the population combined?) 

Even if your office has a closed-door policy, you're still susceptible 
to intrusion by salespeople. They make an appointment with one 
agent and then roam the office distributing brochures and 
notepads and pens and issuing invitations for lunch, dinner, or 
coffee. You could eat lunch for free forever if you played your cards 
right. However, for your own success, protect your time and spend 
it selling rather than being sold. 

*«* Low professional standards and practices. Lack of professionalism in 
residential real estate stems from the following three root causes: 

• Low barrier to entry. In most states, once you complete around 90 
hours of training you're ready to sit for the real estate exam. Log 
onto an Internet course and you don't even have to show up at an 
actual school or for a set of classes. 

Chapter 2: Deciding Which Type of Real Estate Is Right for You 3<^ 

The case for full-time professionals 

In my view, as residential real estate profes- 
sionals, we owe more to our clients and our 
industry than part-time participation. Starting 
part time to get your feet wet is alright. 
However, after six months or a year, atthe most, 
if you can't cut the apron strings from your other 
job, do yourself, the real estate industry, and 
your prospects and clients a service and end 
your attempt to become a real estate agent. 

Buying or selling a home ranks in the top five 
most stressful events in a person's life. On the 
emotional ladder, it sits right up there with 

divorce. As a real estate agent, you're respon- 
sible for one of the biggest decisions your 
clients make. 

An emotional nature exists in the residential real 
estate business due to the stress levels of the 
buyer, seller, and the other agent. Sadly, agents 
often fuel negative emotions if they don't have 
control of their clients, if they don't have time to 
do the job right, or if they're motivated more by 
the need for a commission check to cover a 
past-due car payment than by the successful 
outcome of the real estate transaction. 



In many states, you pay less than $1,000 for training. Simply put in 
the hours, memorize the material, take the test, write the checks to 
cover the state licensing fees, board dues, and the MLS fees, and 
you're ready to roll. Many real estate companies even rebate some 
of your upfront costs when they issue your first commission checks. 

Constant turnover of agents. Hand-in-hand with the low barrier to 
entry is the revolving door that allows agents to constantly come 
and go as they please. They enter the field, try to make it, and then 
wash out. Fewer than 20 percent of all new agents — not even one 
out of every five — actually stay and experience success in the field. 

Many people (including myself) gravitate toward careers in residen- 
tial real estate when they can't get a job anywhere else. My story is 
that I couldn't get hired after months of trying to get a "good" sales 
job. I didn't have a college degree, and no larger company was 
going to take the risk on me, so I went into real estate sales. 

Part-time operators. It's difficult to rise above the rank of amateur 
when you're only partially devoted to an activity The residential 
real estate arena teems with part-time agents — many of whom 
have obvious deficiencies when it comes to skills, abilities, knowl- 
edge, commitment, service, expertise, and access. 

The biggest problem is that consumers and even other agents often 
don't know that the people they're working with are part-timers. 
Obviously agents don't advertise the fact. I wouldn't exactly con- 
sider it a badge of honor to admit, "I'm just part-time agent trying to 
earn enough money to take my family to Hawaii next fall." 

3 v P art ' : Acquiring the Keys to Real Estate Success 


Increased volume can equal 
decreased work hours 

By my third year in the business, I was down to 
a four-day workweek. I was able to sell more 
than 150 homes annually while working Monday 
through Thursday and taking Friday, Saturday, 
and Sunday completely off, with no interrup- 
tions from the cell phone, pager, fax, or e-mail. 
On Thursday, around late afternoon to early 
evening, my wife, Joan, and I would get into our 
car and drive to our vacation home in Bend, 
Oregon, some three hours away, for three days 
of downtime in recreational paradise. On 
Sunday afternoon, we would head back to 
Portland refreshed, relaxed, and ready to go. 

Over the weekend, my buyers' agents would 
handle buyer calls and inquiries. The other 

agents that wrote offers on my properties would 
have to wait until Monday for them to be pre- 
sented to my sellers. I know that frustrated a 
few agents, but since I had well-priced homes, 
they would wait. As a listing agent, I had the 
control and quality of life that most agents could 
only dream about. 

I only worked one evening a week (Tuesdays), 
which is when I met with clients or caught up 
on prospecting with people I couldn't reach 
during the day. 

The truth is, over time you can build a high- 
volume practice that doesn't require nighttime 
and weekend hours. I'm living proof that it can 
be done and so are all of my clients. 

For example, if a part-time agent is working as the selling agent for 
your listing, you may not discover that fact until you can't make 
contact with the agent, you find horrible errors in the paperwork, 
or you have your broker breathing down your neck to get the deal 
cleaned up. 

u* Lack of training. I believe that lack of training is the cause of our indus- 
try's low success numbers, low customer return rates, and low per agent 
income. Most companies offer only a couple of weeks of introductory 
training for new hires. For the most part, after that the company says, 
"Here's your desk and here's your phone ... go get 'em!" 

Agents look to their companies for success and motivational tools, while 
companies (somewhat rightfully) say, "Hey, you're an independent con- 
tractor, so it's your obligation to build your strengths and pay for your 

I think that the ball is in the agent's court. It's your business — you're 
the one who needs to invest and make it grow. The best money you can 
spend is on training to improve your realty skills, knowledge, attitude, 
philosophy, and business skills. 

i* 24/1 work hours. As a residential agent, you can count on working some 
nights and weekends. Some agents follow a round-the-calendar schedule 
for the duration of their careers. A select few bring their night and week- 
end hours down to almost zero as their success takes hold. 

Chapter 2: Deciding Which Type of Real Estate Is Right for You j / 

is* The public's perception of unlimited access. Real estate clients think 
that their agents should be available at the drop of a hat largely because 
agents have trained them to expect service 24 hours a day, 7 days a 

The National Association of Realtors ran a huge marketing campaign a 
few years ago. They circulated brochures, ran newspaper and magazine 
ads, and aired national TV commercials touting the theme "Real Estate Is 
Our Life." I was furious when I first saw it. I thought they set us real 
estate agents back another 10 years with a campaign perpetuating the 
myth that real estate agents should be constantly on-call for our clients. 
Real estate is an excellent vehicle to fund the lifestyle you desire, but it's 
not your life! Well, it certainly isn't my life. 

The most frequently traveled path to real estate success is to become a 
workaholic and to spend large chunks of time paying the price to be 
wealthy. No doubt about it, you have to work harder than the other 
agents to reach the brass ring, but you don't have to make yourself avail- 
able to clients every hour of every day. If you regularly work 50 hours a 
week — five 10-hour days — and if you focus on the right activities 
during those hours, I guarantee you can make a significant income in 
residential real estate. 

is* Lack of respect. Real estate agents rival Rodney Dangerfield when it 
comes to generating respect from consumers because of our lack of 
business skills and ease at which people can become real estate agents. 
The lack of respect can be seen as self-inflicted because both as individ- 
uals and as an industry, agents do little to illuminate the true benefits 
they provide to buyers and sellers. Instead, promotional messages focus 
on availability and accessibility, which feeds the notion that real estate 
agents are on-call order-takers rather than professional advisors and 

Especially during prosperous market cycles, consumers view the resi- 
dential real estate agent's job as easy and the resulting fees as excessive. 
The mindset that real estate agents are raking in "easy money" is fueled 
by well-publicized national statistics. When the ranks of the National 
Association of Realtors swell from 650,000 members to over 1.2 million 
members over a 48-month period, as it did recently, it's obvious that a 
whole lot of agents must also believe a pot of gold is within reach and is 
worth chasing. 

Many of those 550,000 new agents join consumers in believing that real 
estate agents are paid to simply sell houses. No wonder they view resi- 
dential agents as overpaid. 

What's more, almost every consumer has a friend or relative who has 
recently broken into real estate. If their personal acquaintances are held 
in low esteem, you can bet their impressions transfer to other agents, 
including you — unless you prove them wrong. It may not be fair, but it 
is what it is. 

3 O P art ' : Acquiring the Keys to Real Estate Success 

To earn the respect you deserve, communicate that the value you 
deliver reaches far beyond the creation of a sale. Help prospects realize 
that as a professional real estate agent the value you deliver includes 
protection and security of your client's interests, expert guidance about 
the marketplace, and many other facets that have nothing to do with 
producing a buyer and everything to do with producing a favorable out- 
come for your client. 

Selecting \lour Specialty 

After wading through the pros and cons of each real estate specialty, take the 
time to decide which path you should take. Before setting anything in stone, 
consider how your own risk tolerance aligns with the demands of each arena. 
Then take the upcoming 7-question litmus test to evaluate how well each 
field aligns with your personality and personal interests. 


Evaluating your risk tolerance 

No question about it, agents in commercial real estate experience a much 
stronger risk-and-reward connection than those in the field of residential real 

Residential agents minimize their risk by earning many smaller commission 
checks as the result of numerous deals each year. With only a few deals and 
larger, but infrequent, checks, commercial real estate agents face a greater 
threat when a deal goes awry. 

When I sold residential real estate, my average commission check was $3,900. 
If a buyer or seller was a problem, it was easy to push the F10 button, which 
in the old days of computers was the delete key, and move on to another 
opportunity. If I lost a transaction that was set to close, financially I knew it 
wasn't a killer. 

You have to take your own feelings toward risk into account as you select 
your field. If simply thinking of risks makes your heart stop, take the hint and 
steer clear of the high stakes that come part-and-parcel with a commercial 

Chapter 2: Deciding Which Type of Real Estate Is Right for You j y 


Taking the 1 -question litmus test 

Most successful business leaders adhere to the tenet that if you ask the right 
questions you arrive at the right answers. The following seven questions are 
designed to elicit answers to determine whether your personality, interests, 
and career goals are best suited to a career in residential or commercial real 

Although no one is likely to answer every question for commercial or for resi- 
dential, you can tell which way you're leaning by tallying up your score and 
weighing which questions are most important to you. 

*«* Question 1: What's your risk quotient? 

Do you like to take risks or are you more conservative? Would losing a 
large commission check fry your brain or would you view it as part of 
the game? The higher your risk tolerance, the better fit you are for a 
commercial specialty. 

u* Question 2: Are you willing to work nights and weekends in the initial 
stages of your career? 

If you can't answer yes to this question then you have no choice but to 
steer your career toward commercial real estate sales. In residential real 
estate, you won't become successful without working some nights and 
weekends during your first couple of years. 

t-" Question 3: What part does your ego play in this decision? 

What drives you? Is it important that you're more recognized as a pro- 
fessional? Do you measure success by the respect you receive from 
others? Does your ego trump your desire for income? Or vice versa? 

As I mentioned at the beginning of this chapter, my own ego controlled 
my decision to become a commercial real estate agent. However, once I 
removed my ego and focused on the financial rewards of residential real 
estate, I made the right decision for myself. 

For many people, the right decision is based largely on ego gratification. 
If you're in that group, opt for a commercial career and commit to being 
comfortable with the amount of money that eventually follows. 

u* Question 4: Do you need a structured work environment to succeed? 

If so, how much structure do you need in order to reach your potential? 
If you're among those who need or prefer a strong structure, note that 
the environment in commercial real estate is much more structured. 

[1 (/ Part I: Acquiring the Keys to Real Estate Success 

f" Question 5: Are you a facts and figures salesperson or do you use feel- 
ings and emotions to sway someone's decision? 

This question gets to the heart of the differences between how commer- 
cial real estate agents and their residential brethren sell. Commercial 
agents deal with buyers and sellers that are predominantly facts-and-fig- 
ures oriented. Residential customers base their buying and selling deci- 
sions more on emotions and feelings. 

v* Question 6: Do you need to be part of a team? 

If you're a person who prefers to work as a team member, pause here for 
a moment so you can think. Real estate sales, whether it's residential or 
commercial, is an individual sport. The only way it becomes a team 
sport is if you form your own team, which is easier to do in residential 
than in commercial. 

I truly believe that one of the reasons I was successful at residential real 
estate was because, as a young adult, I played only a few team sports. 
Most of the time, I competed in individual sports where the ultimate win- 
ning and losing was done by me. 

*<* Question 7: Do you eventually want to own investment property? 

Very few people answer "no" to this question. However, key differences 
exist between your ability to purchase what you sell in residential real 
estate and what you can purchase in commercial real estate. First and 
foremost, it's much easier to purchase residential real estate than it is to 
purchase commercial real estate. It takes less money down and the 
financing is more flexible. Also, the investments in residential are easier 
to spot and secure than in commercial. 

Chapter 3 

Pairing with the Right Agency 

In This Chapter 

Weighing the pros and cons of different types of real estate companies 
Knowing the roles of agency players and the rules of the house 
Choosing and joining your agency team 

M^ efore you sign on with a real estate company, you need to take time to 
^J look well below the surface and beyond first impressions to determine 
whether the company is, in fact, the right one for you. 

Most agents, whether new or experienced, don't invest enough time evaluat- 
ing and analyzing companies, owners, and key managers before they commit 
to a real estate firm. In this chapter, I help you to do the homework, compare 
the opportunities, make the choice, and establish a winning partnership. 

Weighing \lour Agency Options 

An agent choosing an agency isn't a whole lot different than a consumer 
choosing an agent. All the choices look good (often they all look very much 
the same!), and they all offer a wide variety of opportunities. What's more, 
they all tell you that they're the best. So how do you choose? 

Choose by weighing benefits. What advantages can you count on in terms of 
training, education, floor time, ad calls, sign calls, and market share by join- 
ing one company over another company? It's fair to ask the broker you're 
interviewing with, "What's in it for me?" 

As you assess company choices, use the upcoming advice to evaluate how 
office attributes and company size match with your own interests and 

IX £ P art ' : Acquiring the Keys to Real Estate Success 


Enthusiasm, coffee, and doughnuts: 
What makes a good office** 

When I look at a real estate office, I evaluate how they rank based on the fol- 
lowing list of attributes: 

u* Energy and enthusiasm. It takes passion to succeed at essential real 
estate activities like prospecting. If you surround yourself with agents 
who lack energy and enthusiasm for the business, it will affect your per- 

When trying to determine if an office has energy and enthusiasm, find 
out if agents are excited to come to work. Also find out if the office has a 
public board where the agents record their listings and sales for all the 
other agents to see. If the office does have a board like this, look to see if 
it's full or empty. Are only a few names covering the entire board or are 
all the agents represented? 

u* Reputation. While you can't count on your company's reputation to do 
your work for you, you can bet that your company's positive reputation 
will help you open doors. 

u* Experienced manager. As a newer agent, you'll benefit greatly from a 
manager who knows the ropes and who has experience taking agents to 
higher levels of production. Ask the following questions: What is the 
manager's track record in raising agent productivity? How long does it 
typically take the manager to reach different production thresholds with 
agents? The right answers can dramatically affect your career arc. 

You're looking for a manager who has a track record of building success- 
ful agents from new agents. Effective managers will have low failure rates 
with new agents and will see more than 40 percent of their new agents 
become successful. That percentage may seem low, but according to the 
National Association of Realtors (NAR), less than 20 percent of the 
agents last more than two years. A manager that can give you time 
frames and statistics on his agent's success is a serious candidate for 
your manager. Most of them could not tell you the stats. 

v* Listings inventory. Does the company offer you the opportunity to 
establish some income over the early months by working someone 
else's inventory while you're creating your own? An established inven- 
tory gives you the opportunity to create buyers and income by working 
open houses, ad calls, and sign calls. For guidance in increasing your 
listing inventory, turn to Chapter 5. 

Chapter 3: Pairing with the Right Agency 2*3 


v* Training focus. Look into how well the company handles the two major 
areas of training: Initial training (so you can earn an income) and on 
ongoing training (so you can build and grow your business). 

I feel that when they're selecting an agency, most new agents don't focus 
enough on the company's training programs because they get wrapped 
up in the "what's my split" game. If, through good training, you're able to 
master the skills you need to excel, your income is unlimited. However, if 
you don't, you have no chance. 

Every company says it offers good training. It's your job to look under 
the hood to see for yourself. To do that, ask these two questions: 

• What's the loss ratio for new agents? The loss ratio is the number 
of agents who fail after completing the training program. This ratio 
tells you the effectiveness of the company's new agent training 

• How do the agents segment into income brackets? The answer 
tells you whether the company's ongoing training is building the 
capabilities of all agents, or of only a few. As an example of a break- 
down you want to avoid, check out Table 3-1, which shows how 
agents in a 200-agent company segment into earning categories. 

Table 3-1 

Agent Segmentation by Income Bracket 

Income Segment 

Number of Agents 

$500,000+ 1 











$25,000 or less 


Here's my advice: If you're considering a company with a segmen- 
tation chart like the one in Table 3-1, run away fast. Opt instead for 
a company where a reasonable group of agents earn your desired 
income. If 80 percent of agents are making less than $50,000 a year, 
the company is a poor fit for a success-oriented agent. 

[1 [l Part I: Acquiring the Keys to Real Estate Success 

Considering the rules you'll be playing by 

Real estate agents follow two basic sets of rules: 

u* The body that governs real estate in your state, which is usually 
called The Real Estate Agency, establishes one set of rules. This group 
sets laws regarding how to handle the earnest money you collect from a 
purchaser, the deadlines for the paperwork that is involved with each 
transaction, who is to receive original copies, and what timeline the 
legal aspects of the transaction are to follow. The focus of The Real 
Estate Agency is centered on consumer protection. 

u* The second set of rules that most agents follow is the code of ethics 
established by the NAR. The code of ethics dictates how agents with 
NAR member companies should conduct business and how they should 
deal with prospects, clients, and other agents. Obtain a copy of the code 
of ethics from your broker, your local real estate board, or online at 
www. realtor . com. 

However, there are also rules of individual agencies. The following sections 
fill you in. 


The rules of the house 

Most company rules are based on the absolutes presented by state laws and 
the NAR code of ethics, but some rules will vary from office to office. 

To protect themselves, some companies shorten the legally dictated time 
frames to ensure that agents turn paperwork into brokers with time to spare. 
Once paperwork is submitted to the principal broker, it gets stamped with a 
date that provides evidence of receipt. The Real Estate Agency can audit a 
real estate company's files at any time and, if paperwork doesn't conform to 
regulations, they can levy fines or, worse, close the firm down until lapses are 

When you're interviewing with a company, request a copy of their set of 
rules, their operational/procedural manual, or their new agent handbook to 
find out how they expect you to work. If they can't produce one, read the lack 
of response as a clue about the organizational level of the company. 

A penny for you, a penny for me; Commission split arrangements 

Media reports advise consumers that seller/agent commission splits are 
negotiable. Likewise, buyer/agent commission splits are negotiable as well. 
You're the one that determines your fees. Some agents charge more because 
they're worth more. 

Chapter 3: Pairing with the Right Agency uy 


New agents all seek a universal formula for commission splits, but none 
exists. Each broker establishes a unique formula, usually beginning with a 
split that apportions 50 percent of the commission to you and 50 percent to 
your broker, moving gradually upward in your favor over time as you achieve 
different earning levels. 

The following list presents some of the most common commission options 
you may see in the industry: 

is* The graduated split: The graduated split is the most common compen- 
sation package. You start at a 50/50 split, which is increased to 60/40 and 
upward incrementally as you become more productive and your earn- 
ings reach company-established levels for graduation. 

v* The graduated split capped: Some companies put an annual cap on the 
revenue the company derives from the graduated split arrangement. 
Once they collect the established amount of company commission 
income, the rest is yours. 

V The graduated split rollback: Under this increasingly popular compen- 
sation arrangement, which is structured primarily for the benefit of the 
company, you receive a graduated split, but at the end of each year you 
roll back to 50/50 or some other established allocation. With this type of 
rollback, the company has a better chance of making decent earnings 
from all earnings. Too often, company expenses and profits are covered 
by too small of a group of agents. By rolling splits back at the beginning 
of each year, companies ensure that their costs are covered by commis- 
sion revenue received early in the year. It also motivates agents to 
increase productivity over the early months to increase their splits over 
the rest of the year. 

u^ 100 percent commission: Colloquially, this is known as the rent-a-desk 
arrangement. Agents on 100 percent commission pay a flat amount 
monthly to rent space and a few services from the company. From there, 
they cover all their own costs and retain 100 percent of all the commis- 
sions they generate. 

You need to be well established and pretty darned successful to do well 
under this system, and for that reason I don't recommend it for new 
agents. The risk is too great for beginners, due to their lack of experi- 
ence in creating leads and opportunities for income. 

Brokerage fees: bon't bite the hand that feeds you 

After compensation arrangements are in place, most brokers add fees to help 
cover their expenses. Among the most common fees to expect are transaction 
fees, fees to cover errors and omissions insurance costs, and franchise fees. 

u* Transaction fees: Many brokers charge agents a per transaction fee of 
somewhere between $75 and $400 to cover the cost of processing the 
paperwork that accompanies a real estate sale. 

[1 %} Part I: Acquiring the Keys to Real Estate Success 


Passing the buck 

I started charging my clients a transaction fee 
of $150 in 1993. At that time, I was among the 
first in the country to do so, joined only by a few 
other high-producing agents. Over the years, I 
raised the amount to $495. Today, it's the real 
estate companies who are charging the trans- 
action fees to the agents. However, with a little 
advance planning and sales tact you can pass 
the transaction fees along to your clients. 

The first step in being able to charge a transac- 
tion fee is believing you're worth the additional 
money. You can't charge the fee if you don't 
believe in your extra value because you won't 
be able to defend why you're worth more. 

Everyone is quick to point out that real estate 
commissions are negotiable. If that's the case, 
why not charge more? If your service is better, 
your skills are better, and the outcome for you're 
your clients is achieved with less risk, you're 
worth more money. 

To show my value, I explainto clients that when 
I first started real estate sales, agents had 
three-page agreements, whereas now they 
have eight-page agreements. I also note that 
agents now have three inspections while before 
only one inspection was performed. More pro- 
cessing is involved in transactions than ever 


U* Errors and omissions (E&O) insurance fees: Many brokers charge an 
E&O insurance fee on a per deal basis, which often adds $75 to $150 to 
each transaction to cover premium costs. E&O insurance protects pro- 
fessionals should they make a mistake in service or representation. In 
such an event, the insurance company covers legal fees and settlement 

*«* Franchise fees: If you join a real estate franchise, expect to pay approxi- 
mately 6 percent of your gross revenue every time you complete a trans- 
action. The percentage is established by the franchise contract. It 
doesn't graduate or fluctuate based on your productivity. 

Does size realty matter) 

Personally, I think size can make up for other deficiencies in real estate com- 
panies, and here's why: 

is* Companies with a large number of agents create a large listing inven- 
tory. As a newer agent, you'll find it easier to get other agents to let you 
work open houses for them if they have 15 rather than two listings apiece. 

l** Large companies enjoy economies of scale, allowing them to provide a 
greater degree of service at a lower price per agent. As a result, they 
can offer more training, more advertising, and more exposure than 
smaller companies can afford to provide. 

Chapter 3: Pairing with the Right Agency [l / 

v* Due to their size, large companies can negotiate better rates for news- 
paper ads, Web sites, development costs, click-through ad banners, 
and mortgage rates. However, large companies follow no hard and fast 
rule for how they direct their savings. Some companies decide to turn a 
larger profit margin for the company. Others — the ones you'll most 
want to join — pass on the benefits to their clients and agents. 

V Large companies hold a dominant portion of market share in their 
communities. As a result, they have the most prominent reputations and 
earn the greatest slice of regional business. 

In the end, you should base your choice on the office attributes instead of on 
the size of the real estate office. However, when two companies have equal 
attributes, let size tip your decision to one or the other. 

Prioritizing your Values and expectations 

Before you can determine whether a company is a good match for you, you 
have to be clear about your own values and expectations so you can see if 
they're shared and supported by the company you choose to work with. 



Knovi your Values 

Ask yourself: What are your core values? What beliefs and principles guide 
your life? What would you hold dear even if it proved to be a competitive dis- 
advantage in the marketplace? Even if the marketplace or business climate 
changed, what aspects of how you work are nonnegotiable? 

Here's an example. In my company, Real Estate Champions, one of our core 
values is "exceptional execution of the fundamentals." I believe in and have 
seen the truly astounding results that occur when people apply the funda- 
mentals of sales and business consistently, without reliance on shortcuts or 
miracle marketing systems. In truth, our company commitment to the funda- 
mentals means that we attract fewer people. Obviously, it's easier to sell 
agents on magic formulas that require no work, energy, discipline, or rigorous 
activity. But, in spite of the competitive disadvantage it presents, our com- 
pany belief in disciplined fundamentals doesn't ever change. It's a core value 
and it's a truth we adhere to. 

When choosing an agency, know what you stand for, what you honor, and 
what you believe in. Once you study yourself, you can then study the values 
of the company you're considering to ensure that your belief systems align. 

Establish your expectations 

What do you expect from yourself over the next 6 to 12 months? What do 
you expect from your company over the same time period? What will your 
new company expect from you? What do they consider to be the minimum 

[1 Q Part I: Acquiring the Keys to Real Estate Success 

standard for new agent production? What do they consider to be average, or 
good, production? What is the most that anyone has ever produced in the 

Before you choose a company, align your expectations with the company's by 
taking these steps: 

*<* Set your goals and expectations for the upcoming year. Establish your 
targets for gross income, number of transactions, number of listings 
taken and sold, and number of buyer sales. 

u* Know the expectations and typical production levels that exist within 
the company you're considering. If your targets are high, you need to 
join a company where established inventories and support systems help 
you jumpstart your business for quick success. If your aims are lower, 
you need to be sure that they match company expectations for new 

Once you establish your goals, keep them in front of you at all times. Carry 
them with you. Put them on your screen saver. Write them on index cards 
and stick them on your sun visor, bathroom mirror, TV set, or anywhere else 
they'll catch your eye repeatedly throughout the day. 

Narrourinq \lour Aqency Short List 

With all the options for where to "hang your license," you'll want to shrink 
your list down to your top two or three firms quickly so you can really study 
each one. The upcoming section will help you winnow it down to the top two 
or three. 

Do yow homework 

Follow these steps as you research each of your top-choice companies: 

1. Rank your top-choice agencies based on your views as a consumer. 

Before you color your opinion with facts or market statistics, ask your- 
self: What is each company's reputation? Based only on information 
available to the general public, what impression does the company 
make? I tell you to do this because once you join a firm, you automati- 
cally acquire this reputation. 

2. Evaluate each company's market share. Determine the portion of all 
real estate business that each firm captures in its geographic area. Then 
figure out what percentage of the market it commands in the specialized 
area in which you'll be working. (See the sidebar titled "Determining 
market share" for some how-to information.) 

Chapter 3: Pairing with the Right Agency [1 y 

Determining market share 

Before selecting a real estate company, find out 
how well it competes in its market area by 
determining the share of the market it com- 
mands. (If the company you're considering has 
more than one office, work out the numbers for 
the office you're likely to join.) 

To assess market share, first get answers to the 
following questions: 

u* How many listings did the company you're 
considering take last year? How many list- 
ings did it sell? How many houses did it fail 
to sell? 

v* How many buyer-represented sales did it 

u* How many agents work at the company? 

Then obtain similar statistics for the entire 
market area. By dividing the firm's performance 
by the total market area performance, you dis- 
cover the firm's market share. For instance, if 
the market area produced 1,000 listings and 400 
camefrom a single company,that company has 
a 40 percent market share (400 -f 1,000 = .40). 

To obtain information, begin by asking each 
company to provide you with its statistics. Any 
company with a competitive advantage knows 
and wants to share its statistics, and many are 
also willing to provide comparisons between 
themselves and their competition. 

Also check with your local board of real estate 
agents, where you can access several varieties 
of information, including the total number of 
agents in the marketplace and the number of 
agents per company. 

The multiple listing service, or MLS, which com- 
piles information on all homes for sale, shares 
information on sales, listings, pending transac- 
tions, and homes that failed to sell — both on a 
market, company, and individual office basis. 

For another good resource, consult your local 
business journal. Most produce annual lists 
ranking companies by industry, and nearly all 
have special sections devoted to the real estate 



Like many real estate agents, I knew I couldn't cover my whole market 
area of Portland, Oregon. I knew that I needed to specialize in specific 
bedroom communities and suburbs in order to serve my clients well. In 
selecting a company, I first evaluated the firm's overall Portland market 
share to discover its general market strength, but then I also evaluated 
the market share it held in the suburban communities I selected. 

Assess how production is distributed within each company. Ask 

whether a number of agents contribute to the company's success or 
whether production is carried by a few agents or even just one person. 

I have a coaching client who creates 27 percent of the revenue and 42 
percent of the listings in her office. Her leaving would be a huge blow to 
the company and the agents whose income is reliant on her presence 
and listings. I would advise new agents to steer away from this type of 

y(/ Part I: Acquiring the Keys to Real Estate Success 


4. Drive around your market area to determine each company's visibil- 
ity. Count the number of signs you see for each firm you're considering. 
Also, evaluate the quality and array of homes presented by each com- 
pany. You may discover that a firm has a lot of signs but that they're all 
concentrated in a small geographic area or a specific price range. 
Beware of these firms, because they could limit your opportunity. For 
example, if a company's business is concentrated at the lower end of the 
marketplace, securing higher-priced listings may be more difficult. 

5. Evaluate each company's advertising. Monitor media for at least a 
month to gain a good perspective of the scope and nature of ads being 
run. While monitoring the media, do the following: 

• Study the large display ads carefully. Often they feature individual 
agents. Could you see yourself in these ads? 

• Go to the grocery store and pick up copies of real estate maga- 
zines. Are the companies you're considering featured? What do 
their ads look like? 

If you see many ads paid for by individual agents of your selected 
company, each featuring their own listings, you'll have proof that 
you'll be working with agents who are willing to invest in them- 
selves and their businesses. 

If you see ads featuring the listings of a number of agents from 
your selected company, you'll know that agents who don't have 
enough listings to fill a whole page (like you in the early days) can 
achieve advertising visibility by buying into a company ad on a per 
slot basis. 

6. Visit the company's Web site. More than three-quarters of all con- 
sumers now search the Web for properties. Is the company's Web site 
easy to use? Are the listings easy to find and navigate? Are agents fea- 
tured on individual pages within the company site? 

Act like an online shopper and find out if the site performs well in online 
searches. Go to major search engines and directories, such as Google, 
Yahoo!, MSN, and AOL, and conduct a search for real estate in your 
market area. How well a company's site ranks in the search results will 
affect the number and quality of leads you generate. 

12 questions to ask each broker 

Your moment in front of a prospective broker is a pivotal one: The broker will 
be sizing you up to determine whether you fit well in the company. Rather 
than treating the session like a job interview, use it to ask questions and 
obtain information that allows you to understand the unique attributes of the 
agency. Ask the following questions: 

Chapter 3: Pairing with the Right Agency J / 


1. What is your training program for new agents? The old school 
approach of "Here's your desk. Here's your phone. Go get 'em." won't 
prepare you for success. You're looking for a legitimate, established, 
multi-week training program that extends beyond contract writing and 
gets into the fields of prospecting, lead follow-up, sales presentations, 
objection handling, and closing techniques. 

2. When was the last time you updated your training program? 

Follow this question with: What did you change about the program? 
Growing companies regularly update training and techniques. If a com- 
pany is still teaching the philosophies and techniques of the 1970s in 
today's dramatically changed environment, that's about all you need to 

3. How many new agents do you train annually? 

Companies that regularly recruit and train new agents usually have 
better training programs than those that don't. 

Find out the success rate of the agents who completed the program. Ask 
what percentage of trained agents continues with the company for at 
least one year. What percentage lasts two years? As you evaluate the 
responses, remember that the North American real estate industry is 
coming off the best 36-month run in its history. Because of this record 
success, you have to remember to attribute some of the agents' success 
to market conditions rather than to training program quality or agent 

4. Can I talk with a few of your agents? 

Try to get the perspectives of four to five agents, including a fairly new 
agent, an agent who is struggling to produce, a solid producer, and a top- 
performing agent. This diverse group will provide a wonderful view of 
the company's training, education, support, and pathway to success or 

5. How will you help me generate business? 

Ask this question and then wait. Give the broker time to think, and 
expect to hear responses that fall all over the map. Some make specific 
mention of open houses and floor time. Some discuss the frequency and 
scope of marketing efforts. Some offer to pay for business cards. Some 
send flyers announcing your association with the company to those in 
your sphere of influence. 

Use the answers to this question to assess 

• Whether the company is committed to helping you succeed. 

• Whether the company has a system or process that works to gen- 
erate business for new agents. 

3^ ' >art '■ Acquiring the Keys to Real Estate Success 



6. Who do I turn to when I have a question or problem? 

As you climb the steep learning curve ahead of you, you need to know 
who will help you find solutions to your problems. You need assurance 
that the person will be accessible. Make sure to ask whether this person 
is available during regular office hours. 

7. What type of computer and software is provided for me? 

Some companies make numerous high-quality computers available to 
agents. Others provide only a dumb terminal, which is merely an access 
point for MLS searches. The dumb terminal doesn't perform any other 
type of computer work. Some companies support agents with company 
database management programs, intranet sites, Internet sites, and even 
electronic marketing pieces or e-cards. With other companies, you're 
completely on your own to purchase the technology tools you need. 

8. Do you have regular office meetings? 

Most companies still hold weekly sales meetings and, based on the 
assessment of our coaching clients, most aren't very useful. When bro- 
kers or managers prepare and conduct staff training, however, the meet- 
ings rise to a whole different level of effectiveness. So, be sure to ask 
whether the meetings are training or informational sessions. 

9. Do you have an agent coaching program? 

The hottest, quickest way to improve performance is through coaching. 
Coaching provides structure, accountability, performance measuring, 
training, and expert guidance. Find out whether the company you're 
considering embraces coaching as a way to increase agent performance. 

10. What does it cost me to have my license with you? 

Most agents enter real estate with limited cash to invest in a new busi- 
ness. Yet they need to fund business cards, errors and omission insur- 
ance, MLS fees, board of real estate agents dues, and licensing fees — 
which can easily total more than $1,000. Some of these costs must be 
paid up front, and others can be withheld from your first commission 

1 1. What's my commission split? 

Save this question until late in your interview. Certainly the answer 
affects your immediate-term income, but I think far too many agents put 
undue emphasis on the commission split as they make the decision to 
"hang their license" with a certain company. 

Whether you receive a 50/50 split or a 60/40 split for the first year means 
very little over the course of your career. What's more important to your 
success is the investment the company is willing to make in terms of 
your training, education, services, leads, and opportunities. The com- 
pany deserves a return for the investment it's making and the risk it's 

Chapter 3: Pairing with the Right Agency Oj 

12. Why should I select this company? 

In essence, you're asking: Why should I join your company over all my 
other options? What makes your company better, different, and more 

Raise a caution flag if the broker hesitates, struggles, or rambles with 
the answer. If the broker can't convincingly display belief and conviction 
that the company is better, you may have a similarly difficult time 
answering if a prospect later asks you the same question. 

Making agency comparisons 

Once you complete your interviews with company brokers, put your assess- 
ments down on paper. On a single sheet, list all your final company candi- 
dates, along with their 1 to 10 rankings in each of the following key areas: 

*<* Initial training 

v* Ongoing education 

v* Marketplace reputation 

u* Market share 

*<* Office environment 

i^* Advertising 

v* Web presence 

v* Lead generation 

V Other agents in the company or office 

«-" Competence of the broker or manager 

As you compare companies, weigh a few areas more heavily than the others. 
Especially in the early phase of your career, put special emphasis on a com- 
pany's training and education offerings. As a close second, pay attention to 
how much the company is prepared to help you with lead generation — based 
on the strength of the firm's Web presence, advertising, and market share. 

And the u/inner is . . . 

As you add your scores for each company, give extra points to companies 
that rate particularly high in training and lead generation. 

Then compare your findings with your initial, first-take impression of each 
company's consumer reputation. Do those with the best reputations also 
rank the highest in your assessment? 

yu Part I: Acquiring the Keys to Real Estate Success 

If two companies rank extremely closely in your assessment, you may want 
to re-interview the broker or another high-ranking manager. Explain that 
you're deciding between two companies. I even suggest that you inform each 
company of your other top-contender. This will allow them to prepare their 
benefits in direct competition to the other company, which in turn gives you 
an indication of their ability to train you in selling based on their presenta- 
tion against a direct competitor. Then, once again, ask why you should select 
their company over the other. And carefully weigh the answer. 

Once you make the final selection, send handwritten thank-you notes to the 
companies you didn't select. Thank each one for the considerable time and 
help they provided you. This act alone will position you in the top 5 percent 
of agents they've ever met. It'll also keep the door open in case you seek to 
work with another firm in the future. 

Joining \lour Aleut Aqency learn 


When joining a new team, the objective is to blend in with the team. As an 
inexperienced agent, expect scrutiny by your associates. Many will greet you 
with a wait-and-see attitude for the simple reason that fewer than one out of 
five agents succeed in the long term while the rest wash out of real estate 
sales. Your fellow agents are waiting to see which category you'll fit into. 

Building a relationship With your manager 

I rarely see a broker or manager with high expectations of a new agent. 
Instead, they focus on potential. They believe that a new agent can become a 
top producer, but they cautiously reserve judgment until they see the quality 
of the agent's action. The key to success is to quickly move from "potential" 
to "performance." 

Even though he's cautious of judging your performance, your manager is on 
your side, rooting and pulling for you to realize your goals, dreams, and 

The best way to build a relationship with your manager is to achieve results 
by taking the following steps along the way: 

1. Involve your manager as you set your goals. 

As you establish specific, concrete, attainable, and exciting goals, ask 
your manager for input regarding what you should do daily, weekly, and 
monthly to achieve your desired outcomes. 

Chapter 3: Pairing with the Right Agency J J 


2. Seek your manager's input as you lay out an activity plan. 

Gain advice regarding which avenues you should follow to achieve suc- 
cess and what you should do daily to bring you closer to your goals. 

3. Ask your manager to help monitor your activities. 

By asking your manager to monitor and coach your performance, 
you separate yourself from 90 percent of the other real estate agents. 
While nearly all other agents want to improve, few are willing make the 
changes necessary for success. 

4. Request a weekly meeting. 

Aim to sit down with your manager at the same time and on the same 
day each week. Some weeks the meeting may last only 15 minutes, 
during which time your manager can review your performance based on 
the contacts made, leads generated, appointments booked, appoint- 
ments conducted, and properties listed or sold. Other weeks there may 
be specific topics for training that you will be working on. 

\lour manager's rote in your success 

Of course you hope for a positive manager who supports you with a high 
level of encouragement, but even a negative manager can play a positive role 
in your success. It's counterintuitive, but when a sad-sack manager tells you 
that you can't accomplish your aims, the comment often ignites conviction 
and taps into a huge reservoir of "I'll show you" attitude. 

A number of years ago, I coached an agent in Medford, Oregon, named Sheila 
Gunderson. She had a burning desire to close $24 million in sales over the 
next year. This amount was up from a current sales volume of about $10 mil- 
lion and was well above the top performance level of any Medford agent to 

Together we constructed a business plan outlining how she would achieve 
her $24 million goal. With total excitement she took it to her broker. He 
laughed, telling her that no one in the market area had ever come close to 
$24 million, and asked her, "Who do you think you are?" 

When I heard her manager's comments, I immediately knew that they would 
only fuel Sheila's fire. And they did. She blew right past the $24 million that 
she had projected and she closed at over $27 million, adding more than $17 
million in sales to her previous year's performance. 

Whatever input your manager gives you • 
fuel your fire. 

even if it's negative — use it to 

J\) Part I: Acquiring the Keys to Real Estate Success 

Earning respect from your manager 

Follow this simple formula to earn respect from anyone, including your 

j-" Do what you said you would do. Get to the office early each day and be 
proactive about prospecting and generating leads. The vast majority of 
agents wait for business to come to them and then make excuses for 
why it never showed up. Take action instead. 

i* Improve your knowledge and education. The vast majority of agents 
attend training courses to earn continuing education credit (or CE 
credit), instead of to learn specific new skills or abilities. 

I can't even count how many times I've been asked if the training course 
I teach is CE credit approved. I always answer with the same response 
and follow-up question. My response is that my course isn't CE certified 
because those who evaluate courses don't grant CE credit to courses 
that teach attendees how to make more money. My follow-up question is 
always, "Do you really want a CE credit course, or do you want a course 
that teaches agents how to make more money?" 

To earn your manager's respect, attend courses and education sessions 
that teach you to make more money. Then implement what you discover 
after the session. 

Forming partnerships 

To get the real estate job done, you'll form many partnerships — some of 
which will last as long as a single deal and others that'll last for years and 
years. In this section, I take a look at those who will join you in the dance of 
real estate sales. 

Earning respect from your peers 

The sales arena — and certainly the real estate sales arena — is a magnet for 
those with big egos. To earn the respect of other real estate agents, you have 
to perform and succeed. Your peers will base their respect on how they feel 
you perform in the following three areas: 

is" Production growth. When you produce, you get noticed. In fact, many of 
your associates will notice your success even before you see a commis- 
sion check, because they'll notice your name on the company listings 

At first, they may attribute your success to luck, thinking "He got good 
floor calls," or "He hit a hot streak," but as your listings keep appearing, 
their respect will build. 

Chapter 3: Pairing with the Right Agency J / 


Few agents perform consistently over the long haul. Most have a good 
month, or quarter, or year, but only a rare few constantly finish at the 
top of the income list. However, when you do, your peers will most defi- 
nitely notice and share their respect. 

i^ Business ethics. Because the commissions can be large, many people 
feel that acting unethically is acceptable. For many agents, money, or the 
opportunity to make money, too often exposes character flaws. 

Be an exception. Maintaining your values even in the most competitive 
situations enhances your own self-respect while also earning the respect 
of your peers. 

v* Life balance. Agents notice and respect other agents who have their pri- 
orities in order; who manage not to be controlled by their businesses; 
and who carve out good chunks of time to spend with their friends and 
families. Few agents manage to earn a large income while also protecting 
their personal time. You'll be recognized and respected as one of the 
best agents in the country if you can strike this important balance. 
(Check out Chapter 16 for more on making the most of your time.) 

Working With agents in your office 

Nearly all agents are independent contractors earning no base salary and 
depending entirely on their own skills, actions, and activities to create income. 
This pay structure breeds competition within the industry and within each 
company. The trick is to balance that competition with cooperation. 

Striking this balance isn't always easy. Invariably, you'll end up competing 
with agents inside your own firm for clients and dollars. One example of 
many is finding that the agent in the next cubical over is working on the same 
lead you are. This situation is usually the result of a prospect who chose to 
work with several agents at one time but who didn't reveal the lack of alle- 
giance to any of them. Later, when one agent writes the contract — after both 
showed the home — well, you can imagine the office arguments I've seen. 
This situation certainly presents a moment where a good broker makes a dif- 
ference. A good broker can mediate the issues between the agents, making 
sure that the client is getting good service while handling all the interper- 
sonal issues between the agents. 

To succeed in this competitive office environment, follow this advice: 

w* Use the other agents as mentors. Nearly all agents owe a debt to some 
other agent who helped them along the road to success, and they feel a 
sense of obligation to repay the favor by being similarly helpful to a new 
agent like yourself. Find a mentor. When you do, be respectful of the 
mentor's time, take action on the mentor's advice or counsel, report 
back on the success you achieve, and say thanks over and over again. 

jO Part I: Acquiring the Keys to Real Estate Success 


is* Help other agents serve their clients better. Agents announce their 
"haves and wants" — the homes they're working to sell and the homes 
they're seeking for clients — and few agents even tune in. Be an 

I made a lot of money matching haves and wants for other agents. When 
I'd hear an agent describe a buyer seeking a three bedroom, three bath- 
room, $250,000 home in the Riverside School District, I'd share informa- 
tion on my two listings that could work and would ask if they'd shown 
them. I'd also mention that I'd seen a great house on Elm Street listed by 
another firm that meets the description. By helping the other agent 
better serve his clients, I was also serving my clients by generating 
showings for them. 

i^ Hold open houses for other agents. Open houses can be burdens on the 
schedules of busy agents. Offer to serve as a stand-in host, supporting 
your associates while also giving yourself an opportunity to create 
prospects and business. 

u* Ask other agents to work with you on listings. If you lack skill or experi- 
ence in a certain price range or geographic area, you risk losing a listing 
to a more established agent. Be preemptive instead. Ask a more estab- 
lished agent in your firm to co-list the property with you. Through this 
short-term partnership you'll capture the opportunity to expand your 
business while you learn and earn. 

Cooperating With agents in your marketplace 

More than 90 percent of all real estate transactions come through the MLS, 
which exposes their availability to agents throughout the marketplace. As a 
result, you're constantly working jointly with agents from other firms to 
achieve sales. As you work with these agents from other firms, form coopera- 
tive relationships by following this simple advice: 

l** Deal with the other agents honestly and fairly. Give them the informa- 
tion they need about your client or the property without giving too 
many details. Always remain aware of the fiduciary responsibility and 
privacy protection you owe your client. 

i^ Involve brokers when necessary. If problems arise between you and 
the other agent, enlist the help of your broker. If paperwork comes back 
too slowly or you feel you're not getting the full facts, get your broker, or 
the other agent's broker, involved. Move quickly if you sense that a lack 
of cooperation is affecting your client's security in keeping the transac- 
tion together. 

Developing strategic partnerships 

Mortgage originators and loan officers lead the list of strategic partners who 
can help you get real estate deals done. These people play an essential role in 
securing your clients' loans. They can help you expand your business 
through several avenues: 

Chapter 3: Pairing with the Right Agency Jy 


is* They can help you serve lower-credit clients. Mortgage originators 
who are skilled and have a broad line of loan products are open to loan 
requests from a broadly diverse economic segment, which increases 
your pool of prospects. 

*«* Some mortgage originators invest in joint marketing efforts. These 
programs may consist of sending mailers to your sphere of past clients 
or to prospects in your geographic area, buying e-mail lists and respond- 
ing with e-mail marketing messages, buying Web site ads, or paying for a 
banner along the bottom of your real estate magazine ads. Depending on 
the arrangement, the mortgage originator may pay for some or all of the 
costs involved. 

is* Mortgage originators can help convert leads. Most agents make the 
mistake of getting the mortgage originator involved in a transaction too 
late. They wait until after they've secured the client relationship to intro- 
duce their loan partner. Make the introduction earlier in the lead conver- 
sion process. Tandem lead conversion is a powerful strategic partnering 

The odds of lead conversion rise significantly when two strategic part- 
ners are working the same contact. Once one of you achieves a face-to- 
face meeting, you both win, because either of you can cross-sell the 
services of the other. 

v The mortgage originator can play the role of a prospect's professional 
advisor. While most prospects view agents as salespeople, their psy- 
chology toward mortgage originators is quite different. They tend to see 
and trust mortgage originators as consultants rather than as the sales- 
people that they truly are. By forming strategic partnerships with your 
mortgage originator, you can put that psychology to work and secure 
more clients more quickly. I've seen agents increase their closed transac- 
tions by over 25 percent through this simple tandem lead conversion 

Also form a strategic partnership with your title company. Title representa- 
tives can help you conduct research and establish geographic mailing lists. 
They also can provide statistics that help you see what homes have sold and 
at what prices over past years, including which areas and neighborhoods 
have seen the highest number of sales. 

Each state and province has different rules regarding how much information 
they can share. Check with a title representative or your broker to find out 
the possibilities in your market area. 


Part I: Acquiring the Keys to Real Estate Success 

Chapter 4 

Researching and Understanding 
Your Marketplace 

In This Chapter 

Discovering the three core rules of real estate 

Collecting and analyzing information on your market area 

Using market knowledge to build your clientele and your personal reputation 

M^ere's a fact: Most real estate agents know too little about the markets in 
¥ W which they operate. That's one reason consumers think they know 
more than — or at least as much as — their agents do and why they don't 
hold their agents in higher regard. 

Now, here's a tip: You can give yourself an edge over other agents and estab- 
lish yourself as a regional real estate expert simply by doing your homework, 
researching your market area, and gaining a good understanding of the reali- 
ties and trends that affect the real estate decisions of your buyers and sellers. 

A new or newer agent faces a steep learning curve to acquire market knowl- 
edge. Developing a sixth sense takes time, and that's what most agents use to 
understand the marketplace. However, instead of waiting to acquire the 
instincts to make good guesses, you can begin today to acquire data and 
knowledge that translates almost immediately to power and influence. 

In this chapter, you look at the realities that affect real estate in every market, 
regardless of location. Then you discover the steps involved in compiling a 
profile of your specific market area, including where to find facts and figures, 
how to analyze your findings, and how to put your knowledge to work to 
build both your reputation and your clientele. 


Part I: Acquiring the Keys to Real Estate Success 

Three Truths That Rule Every 
Real Estate Market 


Whether you're in a major metro market or a small town and regardless of 
the country, the economy, or even the day and age in which you're doing 
business, when you're in the field of real estate, three core rules apply to 
your business: 

is* Real estate is governed by the law of supply and demand. This rule is 
absolute and without exception. The appreciation of a market, the 
expectations of buyers and sellers, and the velocity of market sales are 
all dictated by the supply of — and the demand for — real estate for 

As a recent example, agents saw rapid appreciation and a frenzied 
response by buyers in the U.S. real estate market in the years 2002-2005. 
This response was caused by the fact that demand for real estate was at 
an all-time high while the supply was limited. This supply and demand 
caused rapid appreciation, with home sellers receiving multiple offers 
within days or even hours. At one time during that period, homes in 
southern California were selling, on average, at 18 percent above the 
listed price — the result of a market condition where demand out- 
stripped supply. 

is* Real estate is governed by the law of cause and effect. Put differently, 
positive situations cause positive outcomes, and vice versa. For exam- 
ple, a vibrant economic growth leads to a vibrant real estate market and 
strong appreciation of homes, while loss of jobs and a languishing econ- 
omy produce exactly the opposite effect. 

As a specific example, as the baby boom generation matured, it fueled 
an explosion in second home purchases so strong that more than 21 per- 
cent of 2004 U.S. home sales were second home purchases, most 
acquired by aging baby boomers. This surge created desire for addi- 
tional housing that affected the construction and home values in second 
home markets nationwide. 

v* History repeats itself. In any marketplace, you have cycles. Periods of 
rapid real estate appreciation are followed by stagnant periods where 
values stabilize or even decrease. By acquiring marketplace knowledge, 
you can foresee trends both for your own benefit and for the benefit of 
your clients. 

For example, in a number of key U.S. market areas, more than 40 percent 
of new home loans are being written as low money down, interest-only 
mortgages. These limited-equity position purchases are being made on 

Chapter 4: Researching and Understanding Your Marketplace Oj 

the assumption — the gamble — that the recent rapid-appreciation 
cycle will continue and that housing prices will climb ever higher. When 
the growth trend stops, as it has many times before, home values will 
decline, mortgage balances will exceed resale prices, and a large group 
of home buyers will be forced to walk away from their homes as banks 
foreclose on a significant number of loans. This trend will further lower 
values and stagnate growth, as it has many times before. 

Acquiring Ktwuttedqe about 
l/aur Marketplace 

By knowing your market and watching regional statistics, you're prepared 
and proactive. This section helps you acquire the necessary information. 

Think of your marketplace as your playing field, not unlike an athlete views a 
football field, basketball court, or hockey rink. The better you know every 
inch of that playing field, the more you can exploit it to your advantage. 


Collecting marketplace information 
from key sources 

The most challenging aspect of gaining market knowledge is determining 
what facts to collect and where to find the information you need. Fortunately, 
a number of readily accessible resources are available to real estate agents. 
All you have to do is contact the right people and ask the right questions. 
The following sections help you on your data quest. 

The importance of home field advantage 

Before I became a real estate agent, in my early 
twenties, I was a racquetball professional. I 
played hundreds of tournaments over my sports 
career, and always my best games were at my 
home club. There, we had a court with floor-to- 
ceiling glass on the right side and back wall, 
making it particularly difficultto see in the back 
right-hand corner where the two walls of glass 

When players came for tournaments at my club, 
they struggled to pick up the ball in that corner, 
giving me a significant home field advantage. I 
rarely lost a match on that court. 

Real estate is like any other competitive 
endeavor. If you discover all there is to know 
about your playing field, you acquire a com- 
petitive advantage that distances you from 
the competition and builds the basis of your 

\)[l Part I: Acquiring the Keys to Real Estate Success 

\lour local real estate board 

Most professional agents belong to associations that compile and make avail- 
able a wealth of statistical information. The facts you can obtain from your 
local board include: 


is* The number of agents working in your marketplace. This information 
helps you to understand your competitive arena. It also allows you to 
track whether your competition has expanded or receded over recent 

i^ The production of the average agent in terms of units and volume 
sold. By obtaining this information and comparing it with your own pro- 
duction units and volume, you're able to contrast your performance 
against the other agents in your local board. This information is useful in 
your effort to calculate your share of the market (see Chapter 14 for 
more on this topic). It also helps you understand how well you stack up 
against the other agents your prospective customer may be considering. 

is* Experience levels of agents in your field. Most real estate boards keep 
information regarding the percentage of agents recently licensed and 
those agents with three, five, and ten years in the business. This infor- 
mation provides you with another factor against which to measure your 
competitive position. 

Meet with the executive director of your local board of real estate agents to 
find the extent of information that's available to you, how frequently new 
research is released, and how you can obtain copies for your ongoing review. 

\lour beat multiple listing service 

The multiple listing service, commonly called the MLS, keeps statistics of all 
the listings and sales in your area that are processed through the MLS. 

The MLS doesn't cover every sale due to the fact that some sales bypass the 
system. Often, new construction builders, particularly in very robust mar- 
kets, don't submit their inventory into MLS. Agents also sometimes sell prop- 
erties themselves or in-house, without submitting those sales to MLS. 
However, the MLS in most markets covers more than 95 percent of all market- 
place sales, and it represents the surest indicator of real estate activity in 
your region. 

The MLS can give you key market statistics, including: 

f" Days on the market averages 

is* Listing price to sale price ratios 

v* Listings taken versus listings sold ratios 

«-" Geographically active markets inside your service area 

Chapter 4: Researching and Understanding Your Marketplace \)j 

Nearly all real estate agents recognize the MLS for its significant role in 
increasing communication and exposure of real estate properties. Fewer real 
estate agents recognize the MLS for its powerful but underutilized role in 
reporting trends and performance of agents, companies, and subsets of the 
marketplace. Access this information and put it to work to your advantage. 

The National Association of Realtors 

You can obtain a wealth of knowledge and statistical trends from a number of 
national resources. The best is the National Association of Realtors (NAR), 
which produces some wonderful studies, reports, and market statistics that 
most agents never use. The truth is that most agents don't even know they're 


The NAR's monthly Web-based publication, Real Estate Insights, provides a 
national view of real estate sales: What's happened in terms of sales and days 
on the market, what people are purchasing, what financing they're using, 
emerging trends, and predictions for the future. This Web-based publication 
is a powerful tool in the hands of a successful agent. If you aren't currently 
receiving and reading it, put it into your information arsenal immediately. 

The NAR also conducts annual surveys and studies of home sellers and 
homebuyers. They delve into why consumers select particular agents; what 
services they seek from agents; and what geographic areas, home amenities, 
and features cause them to buy. This type of knowledge enables you to pro- 
vide the highest level of counsel and value to your clients. 

NAR also issues reports on second home markets, investment properties, 
financing options, and many other topics. It's one of the best services that 
NAR provides, but it's the service that agents use the least. Make yourself an 
exception and dive into this deep pool of information. 

Visit the NAR Web site at www. realtor, org to obtain an overview of the 
association, to access quick links to useful sites including REALTOR Magazine 
Online, and to subscribe to receive e-mail updates on real estate topics and 

Other sources of marketplace information 

Consult your broker about company-compiled statistics on regional trends 
and also on your firm's market share and market penetration. Especially if 
you work for a regional or national real estate company or franchise, your 
organization has likely commissioned studies that can be useful to your fact- 
gathering efforts. 

Also, if you live in a state where sellers provide title insurance to buyers, the 
title companies often conduct market trend reports that allow agents to 
better understand the marketplace they work in. 


Part I: Acquiring the Keys to Real Estate Success 

Analyzing the facts and figures 

When you have access to solid facts and figures, take the time to interpret 
your findings in order to arrive at conclusions that can steer your business in 
the right direction. 

This section helps you seek and analyze answers to three important questions: 

u* What proximate real estate markets are influencing your market area? 

v* What migratory pattern is your market area experiencing? 

v* What market trends are you seeing that can help you prepare yourself 
and your clients for success? 



Determining the influence of other regional markets 

Real estate in your market area is affected by influences outside of your own 

For example, when I sold real estate in Portland, Oregon, what was happening 
in terms of inventory, appreciation, and activity in Seattle, Washington, had 
an effect on my own marketplace. The two metropolitan areas are less than 
200 miles apart and one influences the other due to the easy and frequent 
population movement between the two cities. 

The largest regional influence for my market, however, was California. This 
influence was caused by a massive influx of people from California to Oregon, 
particularly from the bay area of San Francisco and the greater Los Angeles 
area. These geographic areas drove tens of thousands of people into the 
Portland metro area annually, increasing the demand for homes and raising 
values and prices as a result. 

The population exodus started because the difference in price between the 
Portland market and the California market triggered the law of cause and 
effect. The appeal of Oregon's lower real estate prices caused California resi- 
dents to want to move, either to cash out of expensive California properties 
and apply the profits to better homes at lower prices in Oregon, or to relo- 
cate to an area where they could finally achieve first-time home ownership. 

To determine how neighboring regional markets are affecting your market 
area, study migratory patterns and then research the reasons behind the 
population movements you discover. 

Studying population migration patterns 

To quantify population migration trends that affect the buyer and seller pool 
in your market area, determine the answers to these questions: 

Chapter 4: Researching and Understanding Your Marketplace %} / 

v* Is your marketplace growing in population or are people migrating into 
your area (possibly due to births, migration, or immigration)? 

v Is your marketplace losing population or are people leaving your area 
(possibly due to deaths, migration, or immigration)? 

*«" Where are new residents coming from geographically? 

u* Where are current residents going when they move away? 

i* At what rate are people arriving or leaving your area? 

v* What economic factors are driving population changes (such as jobs, 
unemployment, and business growth) in your marketplace? 

If your answers lead you to believe that a population boom is pending, pre- 
pare yourself and your clients to take advantage of a seller's market and the 
positive effects of a high demand, low supply market situation. 

Conversely, if your answers lead you to believe that a population exodus is 
beginning to take place, you can steer buyer and seller decisions with that 
knowledge in mind. 

Identifying and capitalizing on market trends 

To understand your marketplace and its economic condition, compare cur- 
rent market activity with correlating statistics from the previous year: 

*«* Compare number of sales and total sales volume, both on a year-to- 
year and on a year-to-date basis. This comparison helps you under- 
stand and forecast trends in your marketplace and answer the following 

• Is the number of sales going up or down? 

• Is total sales volume going up or down? 

• Is the marketplace ahead of or behind the pace of sales from the 
previous year? 

is* Compare the number of listings taken. The available inventory in a 
marketplace is the supply half of the supply and demand equation. Now, 
ask yourself these questions: 

• Is the number of listings up or down? Fewer listings indicate a sell- 
ers' market; many listings indicate a buyers' market. Do you see 
more or less competition for buyers than in previous years? 

• Is the selection better for buyers than last year at this time? 

• Is the inventory of homes for sale growing or shrinking as com- 
pared to this time a year ago? 


Part I: Acquiring the Keys to Real Estate Success 


is* Compare last year's average sale price to this year's average sales 
price. Determine your market's average sale price by dividing total sales 
revenue by the number of homes actually sold. Knowing the average 
price helps you answer the following: 

• Is the average sale price going up or down? If a marketplace is 
healthy and vibrant, the average sale price is increasing. 

• Is your marketplace appreciating or depreciating in value? For 
instance, if the average sale price has gone from $249,000 to 
$257,000, your marketplace is appreciating in value. 

Be aware that the average sale price must be viewed on at least a 
quarterly basis. A one-month change in this particular statistic a 
month doesn't indicate a sustainable trend. This fact is especially 
true in small market areas. 

• How well is the inventory of homes aligned with demand? If you 
have an appreciating marketplace, the inventory probably is lower 
than the demand for homes. In a flat or depreciating marketplace, 
the inventory or supply probably exceeds demand at this time. 

*<* Compare the percentage of appreciation of average sales price this 
year versus last year and year to date. 

• Is the appreciation percentage increasing or decreasing compared 
to this time last year? 

• Is the marketplace gaining strength in appreciation or losing its 

To understand your marketplace and its economic condition, create a market 
trends analysis by comparing current market activity with correlating statis- 
tics from the previous year. 

Using facts to enact change 

A few years ago a large national real estate 
brand conducted a survey of all their buyers and 
sellers. They studied the satisfaction levels of 
clients before, during, and after the sale. They 
then surveyed the clients to discover what, if 
anything, theythought was missing in the serv- 
ices they were receiving. 

And then they went a step further. Instead of 
stopping with success and resting on their lau- 
rels, the researchers looked to see what new 
opportunities the facts were unveiling. 

From this study and others like it came the birth 
of one-stop shopping in real estate. 

Today, one-stop shopping — where the con- 
sumer can find a real estate agent, mortgage 
originator, and escrow and title insurance all 
under one roof — is proving a huge conve- 
nience to consumers and a major business 
expansion opportunity to agents. All because 
someone took the time to ask, listen, interpret, 
and then act on market research and findings. 

Chapter 4: Researching and Understanding Your Marketplace %} y 

Compiling a marketplace analysis 

Before delving into your own marketplace analysis, check to see whether 
your local real estate board or MLS compiles monthly reports on your mar- 
ketplace. If so, save yourself a lot of time by using the statistics they can pro- 
vide on the current homes for sale in your area, which are often broken into 
regional geographic areas. 

If the essential data isn't available, sharpen your pencil, clear some calendar 
time, and follow these steps to construct the analysis on your own on a 
monthly basis: 

1. Segment your marketplace by area. 

You need to acquire both a macro view of the whole marketplace and 
micro view of selected neighborhood or school boundary areas. The 
broader view is helpful, but the close-in view on specific market areas is 
essential when you're showing particular properties to clients. 

I feel the easiest way to create segmented market profiles is to track real 
estate performance using the existing MLS segmented geographic regions, 
because the real estate data is already aligned in that format. Or, as an 
alternative, use the same segmentation featured in your newspaper's real 
estate classified ads, as that aligns with common market knowledge. 

2. Determine available inventory levels. 

Know the level of competition for your buyer's dollars by tracking the 
number of active listings on the market for sale. In most normal market- 
places, about 65 to 70 percent of the inventory sells. However, these per- 
centages climb higher (even to 90 percent) when inventory levels are low. 
These sale percentages are affected by the market's inventory levels. 

3. Calculate the number of transactions in the last 30 days. 

To get an accurate picture of marketplace activity, look at the number of 
pending transactions for properties that are in the process of closing 
and transferring ownership. In most markets, a property remains as a 
pending transaction for 30 to 60 days, after which time the money and 
ownership is transferred, and the deal is referred to as closed or sold. 

Analyzing the market based on pending rather than closed or sold prop- 
erties is important because the completed transactions reflect the activ- 
ity of the marketplace 30 to 60 days ago rather than right now. 

In a marketplace that's active or even volatile, dramatic changes can 
occur over a time span of 60 days. Earlier this year in one of my client's 
marketplaces, the inventory of homes for sale went up by over 40 per- 
cent in less than 60 days, and pending sales went down by 29 percent. If 
my client had been tracking sold or closed properties, she wouldn't 
have understood the reality of the marketplace for another 60 days. 
Because she was watching pending activity, though, she was able to 
counsel her clients about the changes and acquire price reductions on 

/(/ Part I: Acquiring the Keys to Real Estate Success 



her listings before other agents in her marketplace recognized what had 
happened. She ended up saving her sellers money by acting quickly and 

4. Calculate the absorption rate, or how many months it takes for the 
currently available inventory to be purchased. 

This last calculation is an important one. By taking the current inventory 
level and dividing it by the number of pending properties, you can calcu- 
late how many months worth of inventory are for sale in your market 
area. This calculation provides a snapshot of current supply and demand. 

For example: If 250 homes are for sale in a given geographic area with 50 
of them pending this last month, take 250 divided by 50 to end up with 5. 

This number means the marketplace has five months worth of inventory, 
provided that no other homes come on the market in that time. You know 
that more homes will be listed for sale, but you have to use some baseline 
for analysis. The resulting determination that the market has a five-month 
housing inventory indicates a good market, but certainly not a great one. 

In contrast, one of my clients in southern California sent her market stats 
recently, showing 110 properties available with 228 pending on a monthly 
basis. That's quite a different and more robust marketplace than one with 
250 actives and 50 pendings. One has five months worth of inventory, and 
one has less than two weeks. Now ask yourself these questions: 

• Which market do you think is appreciating faster? 

• Which market allows the seller greater control? 

• In which market do homes spend fewer days for sale? 

• In which market do buyers have the least control and the greatest 
need to meet seller demands in order to make the purchase? 

• Which marketplace inspires the greatest seller greed? 

• In which marketplace do the sellers put more pressure on agents 
to cut their commission rate? 

The marketplace with two weeks of inventory is the right answer to all 
these questions. 

If you know the numbers, you can know the future of your marketplace. The 
trends are predetermined by your monthly analysis. Don't leave your office 
without one! 

Projecting trends on the horizon 

Most real estate trends are a reaction to the law of supply and demand. As 
you project trends, study your market analysis for hints of changes in your 
market's inventory. At the same time, study your region's economic growth 
and stability for hints at what's taking place to influence consumer demand. 

Chapter 4: Researching and Understanding Your Marketplace / / 


In general, a low inventory of homes leads to increased appreciation and 
more competition for "high demand" properties, which include homes that 
are in superior condition and in superior locations. In a low inventory mar- 
ketplace, sellers can often overreach in terms of pricing. When inventory 
levels are high, the competition for buyers slows appreciation. It also extends 
days on the market and can even drop sales prices due to a lack of purchaser 
urgency to "buy now." 

Putting \lour Findings to Work 

Most agents, even the good ones, are far from being experts in their field. 
They create clients and sales through strong relationships rather than 
through superior knowledge and expertise. To differentiate yourself, acquire 
a deep understanding of current and emerging market trends and then share 
your findings with prospects, current and past clients, and others in your 
sphere of influence. Doing so helps you position yourself as a leading expert 
in your market area. (For more on the important topic of how to stake your 
market position, flip to Chapter 14.) 

Whether you're making contact by phone or in person, get the conversation 
going by presenting questions that prompt interest, inspire urgency, and 
convey your market knowledge and authority. For example: 

v* Are you aware that we have less than two weeks of inventory in the 
price range you're looking for? 

*<* Did you know that the average home price has appreciated over 15 per- 
cent in the last six months, meaning that this same home you called 
about today would have been $25,000 less six months ago? 

v* Has anyone told you that, on average, a high-demand house is on the 
market only 21 days in today's environment? 

After you seize a client's interest, immediately ask for an appointment to 
meet due to the marketplace inventory being low or high, appreciation being 
low or high, the days on the market being low or high, or other market condi- 
tions that work to your favor. 

Let me share with you a script example. 

"Bob, did you know that the average home price in your area has risen over 
15 percent in the last six months? Here 's what that means to you: This same 
home we're talking about right now would have been $25,000 less if you'd 
called me six months ago. Based on the trends in the marketplace, we 
should get together right away. I'm sure you don 't want to lose another 
$25,000 in the next six months. Would Wednesday or Thursday this week be 
better for you to meet?" 

7 £ P art ' : Acquiring the Keys to Real Estate Success 

Sharing your market research 
to build prospect relationships 

The use of key statistics, such as list price to sales price ratios, days on the 
market averages, and absorption rates, demonstrate your mastery of market- 
place knowledge. It also creates a competitive gap between you and your 
competition by establishing you as the one who can use market forces to 
your client's advantage, raising the probability of a higher sales price, a 
shorter the time on the market, and increased net proceeds. 

To put your findings to work, do the following: 

is* Use your marketplace knowledge to prompt prospects to act now 
instead of procrastinating until a time when market conditions may 
not be so ideal. 

*<* Share your market analyses as a way to stay in contact with past clients 
and others who can positively influence your business. Most of these 
individuals already own real estate, so they're "vested" and interested in 
the local marketplace. For many, their single largest investment asset is 
their home. They care about the market's equity position and apprecia- 
tion. What's more, most aren't in their final home for life. They at least 
secretly wish for a better house in a better neighborhood. By establishing 
and reminding them of your expertise, you place yourself in position to 
counsel them on future home or investment property purchases. 

is* Quarterly, assemble and mail your most recent statistical findings to 
your business contact list. While other agents are sending out recipe 
cards and other trash and trinket items, you're sharing something of real 
value: the state of the real estate market and the state of your recipients' 
major financial holdings — their homes. 

Distributing your findings 
to gain publicity 

Another way to enhance your credibility and public image is to publish your 
monthly or quarterly market analysis in the form of a newspaper display ad. 

A week before the ad breaks, deliver your market analysis and trends projec- 
tion to the journalist who handles real estate coverage for your local newspa- 
per. Your findings may or may not make their way into a news story, but by 
furnishing the report on a regular basis, you establish yourself as a regional 
authority who can be called upon for real estate quotes or interviews. The 
effort costs you nothing but pays off by elevating your stature in the commu- 
nity. Nothing is better than a third party validation to cement your status as 
an expert in your marketplace. 

Part II 

Prospecting for 
Buyers and Sellers 

The 5 th Wave 

By Rich Tennant 

"... and don't ignore those incarceration moments. 

I can't tell you hov* many referrals I've gotten 

in a holding tank."" 

In this part.. 

^/respecting is the one and only sure-fire pathway to 
V real estate success, and this part gives you the road 
map to follow. The chapters in this part tell how, why 
and when to make contact with prospects, how to turn 
prospects into leads, how to secure face-to-face appoint- 
ments, and how to convert prospects to buyer or listing 

I'm a prospecting enthusiast because I know from experi- 
ence that prospecting drives sales and that sales drive 
you straight to your income goals. In the next five chap- 
ters, I share how to establish and follow your prospecting 
plan, how to mine gold from referrals, and how to tap the 
wide-open prospecting opportunities presented by expired 
listings and FSBOs, or homes listed for sale by owners. 

Chapter 8 focuses on nothing but open houses, which are 
considered by most successful real estate agents as long- 
shot selling tools. However, I've found that open houses 
serve as solid prospecting opportunities. 

Chapter 9 winds up the prospecting cycle with a complete 
rundown of the steps and techniques you need to know in 
order to qualify leads, make presentations, handle objec- 
tions, and close the listing or selling contract, thereby 
securing the business and moving yourself a giant step 
closer to a sales commission. 

Chapter 5 

Prospecting Your Way 
to Listings and Sales 

In This Chapter 

Targeting the right prospects 

Knowing and meeting your prospecting objectives 

Applying the four pillars of prospecting 

Using prospecting numbers effectively for success 


respecting is one of the easiest but most misunderstood concepts in the 
field of sales. 

Daily, sales trainers try to sell their "prospecting-free systems" on worldwide 
speaking circuits saying, basically, "You will never have to prospect again if 
you use my system." And because salespeople secretly don't like prospect- 
ing, they readily buy into the too-good-to-be-true no-prospecting philosophy. 

As a salesperson, if you buy into the myth of a prospecting-free sales system, 
failing to learn sound prospecting approaches and abandoning the need to 
continually develop new leads, you end up chasing false promises and endan- 
gering your livelihood in the real estate business. 

What Prospecting 1$ — and Isn't 

Webster defines prospecting as "seeking a potential customer; seeking with a 
vision of success." Notice that nothing in that definition deals with waiting or 
hoping. Starting with the word "seeking," the definition revolves around 
action being taken by the salesperson. In its most basic sense, prospecting 
involves finding people to do business with. 

( %} Part II: Prospecting for Buyers and Sellers 


Prospecting is the pathway to sales success 

As a new real estate agent in 1991, 1 joined an 
office full of experienced agents who were 
doing well. I knew that to succeed I needed to 
prospect. I didn't know much more than that, 
but I understood the value of prospecting 
based on the results I'd experienced in my pre- 
vious sales jobs. 

I'd come into the office at 7 a.m. and by 8 a.m. 
I'd be talking to expired listings, FSBOs, people 
within my sphere of influence, or whoever else 

I could reach on the phone. The snickering from 
the other offices didn't escape my notice, nor 
did it redirect my efforts. The laughing died 
down within six months when my listings and 
sales put me on the top-performing lists — and 
it stopped altogether when I made over six fig- 
ures in my first year in the business. I became 
the number one agent in that office after my 
third year in the business. And my commitment 
to prospecting hasn't stopped yet. 

The other key phrase is "with a vision of success." Prospecting requires positive 
expectations. It requires a positive-results mindset, in part to overcome the 
influences of all the other agents who don't prospect, don't value prospecting, 
and stand by to negatively influence your vision and expectation of success. 

Take a look at Table 5-1 to get an idea of which agent activities are considered 
prospecting and which aren't. 

Table 5-1 

Prospecting Defined 

What Prospecting Is 

What Prospecting Isn't 

Calling past clients 

Mailing magnets, calendars, and other 

Calling people in your sphere 
of influence 

Setting up a Web site 

Calling expired listings 

Joining service organizations 

Calling FSBOs 

Wearing your name badge 

Cold calling for listings and sales 

Placing magnetic signs on your car 

Knocking on doors 

Sponsoring a community sports team 

Hosting open houses 

Doing floor time 

Chapter 5: Prospecting Your Way to Listings and Sales / / 

What Prospecting Is 

What Prospecting Isn't 

Calling absentee owners 

Answering e-mails 

Cold calling from lists of names 

Pinning your business card on bulletin 

Prospecting for Listings Versus Buyers 

The purpose of prospecting is to develop prospective clients for your busi- 
ness. The real estate prospecting process involves the following two-steps: 

1. Identifying and creating leads by establishing contacts with people 
who have interest in what you're offering and who have the ability 
to become clients of your business. 

2. Securing face-to-face appointments for predetermined times in the 

Real estate agents seek two categories of clients: sellers, who become listing 
clients, and buyers, who become real estate purchasers. The following sec- 
tions provide tips for how to prospect for clients in each group. 

Prospecting for listings 

Listing leads come from past clients, those in your sphere of influence, 
expired listings, FSBO conversions, open houses, lead cultivation, and door 
knocking, but they rarely come without some effort, and here's why: The ten- 
dency when people send you referrals is to send you prospective buyers. The 
public's perception is that real estate agents sell houses by putting people in 
their cars and driving them around to look for a home to buy. 

To generate listing leads, you have to do some pretty active prospecting 
work, such as the following: 

v* Use your networking skills. Specifically ask those within your sphere of 

I influence, your circle of past clients, or your referral groups to share the 
names of people who need or want to sell real estate. 

/ Q Part II: Prospecting for Buyers and Sellers 

i^ Gather up expired and FSBO listings. To achieve a greater listing inven- 
tory and develop a specialty as a listing agent, cultivate listing prospects 
by working with expired and FSBO listings (flip to Chapter 7 for the full 
rundown on how to excel in this area). 

*«* Prioritize your efforts. You must prioritize your investment of time 
based on the probability of your success. Prioritizing must be done 
based on activity as well as the prospect. Some prospects warrant a 
larger investment of time and resources because of their short time 
frame, their higher level of commitment to you, or the amount of com- 
mission you will receive from them. 

Prospecting for buyers 

Prospecting for buyers is easier than prospecting for listings because refer- 
rals arrive more naturally and because open houses attract prospective 
buyers and provide you with a great prospecting platform. 

If you're short on buyer prospects, increase the frequency of your open 
houses. (Chapter 8 provides a complete how-to guide.) 

The type of houses you choose to show determines the kinds of prospects 
you generate. Obviously, higher priced and more exclusive properties draw 
more discerning buyer prospects, while lower priced properties attract less 
affluent prospects. 

To build your business quickly, work to generate leads from more first-time 
home buyers by planning more open houses in the low range of your market- 
place. First-time buyer prospects benefit your business because they 

**" Can be sold into homes quickly, since they aren't burdened with the 
need to sell homes in order to make purchases possible. 

f" Lack experience with other real estate agents. They don't have current 
agent affiliations, and they don't approach a new agent relationship with 
the baggage acquired from a less-than-stellar past experience. 

*<* Acquire strong loyalty when good service is rendered. This allows you 
to establish a long-term relationship that may span 10 to 15 years with 
multiple home sales and purchases over that period. 

u* Provide you with an opportunity to establish relationships with their 
friends who may also be considering first-time purchases. 

Chapter 5: Prospecting Your Way to Listings and Sales / y 

The Four Pillars of Prospecting 

For long-term prospecting success, apply the following four disciplines that 
are common to agents who consistently achieve their revenue and quality of 
life goals. 



/. Set a daily time and 
place for prospecting 

You can't work your prospecting around your day. You have to work your day 
around your prospecting. You have to establish the habit and engage in the 
discipline of prospecting on a daily basis and from a controlled environment 
where your prospecting tools are available and readily accessible. To para- 
phrase from the '60s hit Batman, prospecting success is all about the "same 
bat time, same bat channel." 

In my private office, I set up a prospecting station that included a stand-up area, 
a computer, and telephone with a headset. Knowing that body language com- 
prises 55 percent of the power of communication, even when communicating by 
phone, I kept my intensity and focus high by standing up. The headset — which 
I consider an absolutely essential prospecting tool — enabled me to keep my 
hands free so I could gesture or accentuate points as if I were speaking directly 
to my prospect in person. 

When making an investment in a headset, don't get the cheapest one you can 
find. Spend a few hundred dollars to get one of high quality. Otherwise, you'll 
end up with such poor sound quality that your prospect won't be able to 
hear you clearly — that would hardly be a formula for prospecting success. 

To increase my efficiency, I tacked scripts on one wall of my prospecting sta- 
tion for use when contacting expired listing and FSBO prospects, past clients, 
those in my sphere of influence, and those who I reached via cold calls. On 
another wall, I posted all of my objection-handling scripts, including a few 
options for each objection. Having these scripts handy kept me prepared for 
any dialogue or for any direction the conversation took, and allowed me to 
avoid fumbles. For more on objection handling techniques, turn to Chapter 9. 

2. Fight off distractions 

The truth is that most agents welcome distractions that take them away from 
prospecting obligations. An inbound phone call, a problem transaction, a 

o() Part II: Prospecting for Buyers and Sellers 


home inspection question, an incoming e-mail, an agent who wants to talk, a 
broken nail — anything will do. This tactic is called creative avoidance, and 
agents (like college students) generally excel at this art form. 

Whether you're just starting out or whether you're a top agent in your 
market, distractions never go away. In fact, the best agents have even more 
potential for distraction because of the volume of business they carry, the 
number of staff members they manage, the size of their client roster, and the 
scope of the responsibilities they juggle. 

The difference between prospecting avoidance and prospecting success 
comes down to the following question: What do you do when the distractions 
hit? Do you postpone prospecting while you put out fires? Do you decide to 
make just a few calls to settle the pending issue? If you said yes to any of 
those questions, you're practicing creative avoidance. 

To fight off distractions, you have to bar their access by doing the following: 

V Turning off your e-mail so the "you've got mail" icon doesn't tempt you. 

v* Asking the receptionist to take messages for inbound calls during your 
prospecting sessions. 

j-** Turning off your cell phone and pager. 

«-" Putting a sign on the door that basically says, "Don't bother me. I'm 

U* Telling anyone who asks for a meeting during your prospecting period 
that you already have an appointment, because you do — you have an 
appointment to find a potential prospect. 


3- follow the plan 

Success boils down to taking the right steps in the proper order. 

To get your prospecting steps and order correct, you must have, and follow, a 
prospecting plan. You must know who you're going to call each day and for 
what reason. The best approach is to set up each day's prospecting plan a 
day in advance. 

If you wait to put your prospecting plan together at the beginning of your 
prospecting session, chances are too high that you'll talk yourself out of 
more calls than you make. Your mental process will get in the way of action, 
causing you to think things, such as "This person will think I'm calling back 
too soon" or "This person won't buy or sell right now." 

Chapter 5: Prospecting Your Way to Listings and Sales q / 



If you establish a plan in advance, you'll be ready for action, rather than for 
second-guessing. To be successful in your prospecting, follow these steps: 

1. Do your research, establish your plan, and set up for the next day's 
prospecting a day in advance. 

Before you leave your office for the day, determine the prospecting calls 
you're going to make the next day. Assemble everything you'll need for 
the calls and put the information on your desk so it's ready for your 
attention as soon as you walk in the door. 

2. In the morning, quickly review your calls and your daily goals. 

A word to the wise: Don't take too long to review! You could be setting 
yourself up for creative avoidance. 

3. Spend 20 minutes before each prospecting session practicing scripts, 
dialogues, and objection-handling techniques. 

Establish a pre-call routine and create a pattern or plan that you repeat 
over and over again before each prospecting session or call. 

As an analogy, think of how professionals warm up before performances. 
Whether you're watching musicians, actors, or athletes, you expect them 
to be fully prepared and ready to go when their concerts, plays, or games 
begin. Follow the same rule. Warm up in advance so that by the time you 
pick up the phone, practice is over and you're ready for the real thing. 

4. Review a few affirmations like: 

• "I'm a great prospector." 

• "When I prospect, people love to talk with me and set appoint- 
ments with me." 

• "I will generate leads and appointments before I'm through today." 

You're now ready to pick up the phone with focus, intensity, and an expecta- 
tion of success. 

Make sure you're staying within the bounds of the No Call laws. See the side- 
bar titled, "Keep it legal! Following the rules of the No Call law" in Chapter 7 
for more details. 

4- Be faithful to yourself 
and finish what you start 

Stay faithful to your daily objectives by completing all of your prospecting 
contacts down to the very last one. Don't settle for less than your daily goal. 

82 P art " : Prospecting for Buyers and Sellers 

If you set a goal to make five contacts a day, make the five. Don't stop at four 
and say that you had a good day. 

For example, when you're running a race, you have to run the whole way. No 
one remembers who was ahead at the 80-meter mark of the men's 100-meter 
race at the Olympics. The winner has to complete the full circuit before he 
can claim his medal. Don't drop out early; finish what you start. 

Putting Prospecting to Work for \lou 

You can work harder. Or you can work smarter. Most successful agents don't 
go into a secluded room, pick up the phone, and toil away making hundreds 
of random calls nonstop over an 8-hour period. Few people would even con- 
sider that approach. I know I wouldn't, and I doubt you would either. 

Instead, those who win at prospecting begin by targeting who they'll call and 
why. They don't waste their time or effort calling iffy contacts that may or 
may not even be in the real estate market. 


Prospecting is only effective if it generates a lead from a truly qualified 
prospect — someone who is interested in what you offer, needs the service 
you provide, and has the ability and authority to become a client of your 
business or to refer you to someone who could. 

And that's where targeting, and the upcoming section, comes to your rescue. 

Targeting prospects 

In targeting, you're looking for the prospects that have the highest probability 
of buying or selling in the shortest amount of time. Some easy sources that all 
agents should target are past clients and those in their sphere of influence (the 
people they know). Also worth targeting are expired listings, FSBO's, and refer- 
ral sources, which generate referral business for you. 

Market conditions also can create targets for agents. With each change, 
opportunities are created for a segment of the marketplace. You may have a 
marketplace where the high-end properties aren't selling quickly. However, 
maybe the middle range is robust in activity and sales. The prospect who 
sells in the middle of the marketplace to move to the high end has an oppor- 
tunity to sell high and buy low due to inventory and activity levels of the mar- 
ketplace. This type of prospect would be a great target. 

Chapter 5: Prospecting Your Way to Listings and Sales Oj 


Right on target: Real-life targeting success 

Here's a recent example of the power of target- 
ing. I work with an agent on the East Coast. 
She's an ace when it comes to monitoring her 
marketplace (see Chapter 4 to conduct your 
own market research) and as a result she 
wasn't surprised when she saw her market's 
housing inventory swell significantly over a 90- 
day period. For months she'd watched the 
momentum of the marketplace wane, but over 
the most recent 90 days the effect had shown 
up in the boxscore. During a coaching call she 
said, "It's over." What she was saying was that 
the rapid appreciation and insane marketplace 
frenzy had come to a rapid end. 

In the face of the market correction or bubble 
break, I asked her, "Based on this market 
change, who should become your new target 
for prospecting?" After a few minutes of dis- 
cussion, she aimed her focus on her next 
prospects: Absentee owners, which are people 
who don't live in the property that they own. 
They may be homeowners of a second home 
that is only used seasonally or on a part-time 
basis or may be investors who rent the property 
for income and appreciation. My client correctly 

determined that once they became aware of the 
changing tide, absentee owners would most 
likely want to realize their profits before prices 
dropped further. 

My client made a decision to call these listing 
prospects. She would share the market evalua- 
tion, inventory, and absorption rates. Then she 
would ask if they wanted to risk all the equity 
and appreciation they had gained or if they 
wanted to sell and lock in their gains. As part of 
her script, she would also ask owners whether, 
with appreciation flattening or potentially 
declining, they might find the rental manage- 
ment, headaches, and repair hassles not worth 
the benefits of continued ownership. 

Almost immediately, my client launched her 
new prospecting plan. Within 90 days of our 
call, she had listed ten absentee-owner proper- 
ties, with another 50 leads that she expected to 
list in the next 12 months. 

Her success was based largely on focused 
target-based marketing. She went afterthe right 
people at the right time and achieved tremen- 
dous results. 


Setting and achieving prospecting goals 

In setting your own prospecting goals, focus on three core areas: 

t-" The number of contacts you should make each day and week 

*«* The number of leads you should develop 

*-" The number of personal appointments you should set 

Start with easily attainable numbers so that you can build up your energy, 
intensity, focus, and discipline slowly and steadily. You wouldn't decide to run a 
marathon without working your daily and weekly mileage up over time, and the 
same premise applies when establishing and meeting your prospecting goals. 

Oil Part II: Prospecting for Buyers and Sellers 



Number of contacts made 

When I take on a new coaching client, I almost always start them with a goal 
of five contacts a day, and I would suggest the same for you. Make a goal of 
five contacts a day without fail, resulting in the completion of 25 contacts a 
week. Note: A contact is a personal conversation with a decision maker who 
can make a purchase or sale or who might refer you to someone who could. 
A contact is not a conversation with the babysitter, a 10-year-old neighbor, a 
friendly teenager, or an answering machine. 

It may take three to four weeks for you to get into the habit of contacting five 
prospects a day. However, once you're able to achieve that goal for three weeks 
straight (without missing a single workday), you can raise your goal to seven 
or ten contacts a day. 

Number of leads established 

Leads are contacts that have demonstrated through their dialogues that they 
possess the basic motivation and desire to make a change in their living 
arrangements. When prospecting, until you either pre-qualify them yourself 
or they secure an appointment with a lender that determines they have the 
financial capacity to make a purchase, assume they have the ability to buy. 

To advance your business, you should aim to develop at least one lead per 
day and five leads per week. 

Number of appointments secured 

An appointment is a face-to-face meeting with prospects during which you 

i<* Discuss their needs and wants. 

«-** Share your working style. 

*«* Aim to gain their commitment to work with you in an exclusive relation- 
ship to sell their home or find them a home to purchase. 

An appointment is the launch of the agent-client relationship. It isn't a meet- 
ing during which you show a property. 

Like your lead-generation goal, your appointment goal should be set at a rea- 
sonable level: A goal of one appointment a week is a solid start. If you acquire 
two appointments, terrific, but make sure you can secure at least one. 

Putting it alt into perspective 

If about now you're wondering, "Hmm, five leads and only one appointment a 
week from all those calls," realize that these are starting goals. It's far better 

Chapter 5: Prospecting Your Way to Listings and Sales o3 


to begin with aims that you can actually achieve rather than ones that over- 
whelm you from the onset. As you gain consistency and skill in prospecting, 
both your numbers and your ratios will improve. 

Too many agents burn out quickly when trying to prospect because their 
expectations, in terms of numbers of contacts and the results of those con- 
tacts, are too grand. Start small and work up to avoid frustration and burn 
out. Overestimating what you can do in a day or even a week is easy to do. 
But, remember, it's just as easy to underestimate what you can accomplish 
in a month, quarter, or year. 

Even if you simply maintained the goals and sales ratios of leads and appoint- 
ments you set from the start, you would have a good year as a newer or inex- 
perienced agent. At the end of the year, you would have made 1,250 contacts 
and created 250 leads. You also would have set and conducted 50 appoint- 
ments and would have had two weeks off with your family to boot. 

If only half of the appointments turned into listings or sales, you would have 
25 deals in your first year. In most companies, that would make you rookie 
of the year. You would also earn more than $125,000 in gross commission 
income. I don't know too many people in real estate or in any other profes- 
sion that make that type of money in their first year. 

Shattering the myths 

You've heard at least some of the reasons that agents use to avoid adopting 
sound prospecting techniques. "My market is different" or "You don't under- 
stand how we do things here in Mayberry" are among the many. The truth is 
that the techniques in this chapter work in every market area, everywhere in 
the world, at any point in time. So, bury the myths, especially with the ones 
that follow. 


There's a maqic pitt . . . 

Real estate success is built on a series of fundamentals. One of those funda- 
mentals is prospecting. 

Plenty of people work to sell agents on some magic pill they can take to avoid 
the fundamental need to prospect. These people are greeted by a willing 
market, since many agents secretly want, and hope for, a prospecting-free 
existence — just as people secretly hope those guys on the late-night 
infomercials are right that they can buy a home for no money down at below 
market prices, or that if people pop one pill they can eat whatever they want 
and not have to work out, while still losing weight and gaining a sculpted 


Part II: Prospecting for Buyers and Sellers 


body. Dream on. You won't find a magic mailing program, calendar, magnet, 
marketing piece, or Web site that makes up for the fundamental need to pick 
up the phone and start prospecting for new clients. 

Success without Work: Does it realty exist} 

Agents are quick to share with you how they got where they are today, pas- 
sionately describing their techniques, the people who helped them, or the 
products that made the difference. 

While a few of these agents can tell you the cause and effect link between 
their actions or techniques and their sales and revenue, more than 95 per- 
cent truly have no idea or can't quantify their success for you. 

Your job is to pull the curtain back to reveal the truth about gimmicks. In the 
movie The Wizard of Oz, Dorothy, The Tin Man, The Scarecrow, and The 
Cowardly Lion were all mesmerized and scared of the great and powerful Oz. 
It took a small dog named Toto to reveal that Oz was a little man pulling 
levers and using a sound system to produce the semblance of greatness and 
power. The same is often true in real estate sales: The magical marketing, 
advertising, and promotion gimmicks only work when someone is doing the 
behind-the-scenes work. The guys pulling the prospecting levers will always 
make their own magic. 

In the future, when someone approaches you with great and powerful business- 
generating techniques, pull back the curtain with these questions: 

u* How many transactions does this technique generate for you annually? 

u* How much time do you need to invest to set this technique up and main- 
tain it? 

u* How much does it cost you to use this marketing service to generate 

u* What is the conversion ratio on this technique? 

f" What percentage of your business comes from this activity? 

u* How many buyers have you gained from this approach? 

u* How many sellers have you gained? 

W What is your net profit from this activity after all your costs are 

V Have you included the value of your time in that equation? 

Chapter 5: Prospecting Your Way to Listings and Sales q / 


If it seems too good to be true, it probably is 

I recently received a marketing piece from an 
agent touting his approaches to business. He'd 
sold 60 homes in his third year in the business — 
a very respectable number. Based on his per- 
sonal success, he was promoting his lead-gen- 
eration model as better than prospecting 
because he did 60 deals and generated over 
1,200 leads a month. The average agent would be 
frothing atthe mouth to achieve those numbers. 

I immediatelygrabbed my calculator and did the 
math. He generates over 14,400 leads a year. 

which means his 60 transactions represents a 
lead-conversion rate of .004167 — that's less 
than / 2 of 1 percent. In other words, he has con- 
verted only one person out of 240 leads that 
were generated through his so-called "prospect- 
ing technique." 

You can come to only two logical conclusions: 
The leads he's generating are marginal at best, 
or he's really poor at securing face-to-face 
meetings and subsequentdeals. I'll leave youto 
draw your own conclusion. 

Most people (whether they're other agents, your broker, other trainers, or 
sales gurus) won't be able to answer most of these questions. However, 
they're all sure that what they're advocating is the cat's meow for you and 
your business. 


Top producers don't prospect . . . 

This myth is based on some truth. Many top-performing agents don 't prospect 
once they've "made it" as agents. But you'll be hard-pressed to find top pro- 
ducers who got where they are without prospecting at earlier stages in their 
careers. And you'll be even harder-pressed to find top producers who can 
weather the swings and changes of the marketplace without going back into 
prospecting mode at least occasionally. 

To become a top producer, you must prospect. And to remain at the top of 
your game, you must continue to prospect. Don't ever quit prospecting! 

As you become more and more successful at real estate sales, you may even 
do more prospecting, in part because prospecting becomes more natural and 
is easier than ever. As you acquire name recognition and market presence, 
the people you contact are increasingly honored and pleasantly surprised to 
receive your calls. They know that you're busy and successful, and they 
respond not only with their own business, but with many referrals as well. 

OO Part II: Prospecting for Buyers and Sellers 

My clients and friends don't Want to be bothered . . . 

Agents who use this excuse are focusing almost exclusively on the canvass- 
ing (asking the friend or client to make another purchase from you), or refer- 
ral portion of the call, rather than on the connection the call allows with a 
long-established associate. 

Wouldn't you be delighted to get a call from your accountant, doctor, dentist, 
or insurance agent, asking about you and your family, thanking you for your 
business, and seeing if you needed anything? 

I bet you can count on one hand the amount of times in the last 20 years you 
have received a call like that. If you have received a call like this, you were 
probably stunned, but appreciative. Your sphere of influence, past clients, 
and other associates would feel the exact same way. 

^jJTf Every time I work with a new client, I hear the same excuse for not prospect- 

ing: They don't want to bother anyone. Then they prospect for a week and 
when I talk with them again, they always say the same thing: "I was amazed 
how easy it was. My clients were really happy to talk with me. 1 couldn't get 
them off the phone. It was great to catch up." 

Finding Safety and Success in Numbers 

Real estate sales is a numbers game. Prospecting is a numbers game, as 
well. The problem is, too few agents actually know their numbers and how 
to track them. 

This section helps you understand and set objectives for your ratios of con- 
tacts to leads, leads to closings, appointments to contracts, and contracts to 
closings. Knowing this information moves you almost immediately into the 
league of our industry's most productive agents. 

The law! of accumulation 

The law of accumulation basically says that achievement is the result of ongo- 
ing and constant effort. Everything in life, whether positive or negative, com- 
pounds itself over time. 

An illustration of this involves money. If you want to be a millionaire, all you 
have to do is save a little on a consistent basis and the law of accumulation 

Chapter 5: Prospecting Your Way to Listings and Sales Oy 


takes over. If you put away $2.74 a day from the time you were 20 until you 
were 65 and you received an average rate of return of 9 percent over those 
years, you would be a millionaire. You would've saved about $45,000 over 
those 45 years; the law of accumulation did the rest. If you asked most people 
whether they would trade $45,000 for $1 million they would, of course, say 
yes, but few people would make the effort of saving consistently on their own. 

You can expect an equally incredible return when you invest in prospecting. 
The catch is that the reward for your miniscule investment of prospecting 
effort doesn't happen overnight. You have to prospect for 90 days before the 
law of accumulation does its thing. The benchmark is 90 days because it 
takes that long to build up enough leads in your database. Agents also only 
get paid at the end of the transaction, and it usually takes at least 30 days to 
close a transaction once a buyer and seller agree to terms. Finding a home for 
a buyer or finding a buyer for a property you've listed often takes at least 30 
days. You have to put in the effort before you can expect compensation. As 
my good friend Zig Ziglar says, "Life is like a cafeteria. First you pay, and then 
you get to eat." In other words, life isn't like a restaurant where you eat your 
fill and then the bill comes. 

The power of consistency 

Marginally successful agents take a binge approach to prospecting. Highly 
successful agents are far, far more consistent in their efforts. 


I can't think of an agent who better exemplifies the power of consistency 
than a man I met in 2000 by the name of Rich Purvis. Rich had entered the 
field of real estate after 25 years in a fire-fighting career. His goal was to earn 
$100,000 that year, and when I met him in March his income was standing at a 
disappointing $2,500. 1 told him, "If you call ten contacts within your sphere 
of influence each day, you'll get your $100,000 before the year's end." 

I can count on one hand the number of times he failed to make the ten con- 
tacts. He blew by his goal of $100,000 in less than nine months and ended up 
earning more than $120,000 that year. In 2001, Rich crossed the $200,000 mark. 
All of this was the result of his extraordinary consistency in prospecting. 


The ne</er*endinq prospecting cycle 

You can easily find time to prospect when you have no listings, no pending 
transactions, and no buyers to work with. The secret, however, is to continue 
to prospect even when you're busy with all the other activities. 

y(/ Part II: Prospecting for Buyers and Sellers 

Look at a typical agent's annual income stream and you'll see that it goes up 
and down like a yo-yo. Most agents have four to, at the most, six good income 
months per year. The rest of the time: nada. If you could overlay their rev- 
enue streams with their prospecting numbers, you would see that when 
prospecting tapers, revenue decreases, leading directly to the business void 
that follows. 

Your job as a salesperson is to fill a pipeline of leads so you always have new 
prospects to work with. And the only way to keep a healthy pipeline or con- 
veyer belt of leads is to prospect consistently. 

Tracking daily goals and results 

Any business in sales can be broken down to a series of repeatable numbers 
that, over time, will produce a predetermined result. Once you establish 
goals and track your performance over a few months, you'll be able to 
determine the activities you need to earn the income you desire. 


When I was selling real estate, I decided that I needed one appointment per 
day in order to reach my income goal. I knew through tracking my numbers 
that I needed three leads to create one appointment. What's more, I knew I 
needed to make twelve contacts to generate one high-quality lead, since I 
knew that two of three leads would be "tire kickers" — contacts who didn't 
have the desire, need, ability, or authority to either list or buy in the reason- 
ably near future. 

Based on that knowledge, I determined that I needed to make 36 contacts a 
day: 12 for each of the three leads I would need to result in one appointment. 


Yes, 36 is a miraculously large number of contacts, but in the long-run, you'll 
find that reaching that number is well worth your time. Use Figure 5-1 to 
establish and track your own prospecting numbers. 

The law of averages evens out your numbers over time. Don't evaluate your- 
self on a single day's achievements. Even a week is too short of a period for 
evaluation. I've had days when I didn't set a single appointment. Matter of 
fact, I probably endured weeks of getting skunked. Over a three-month period, 
however, I was always within a 5 percent margin of error on my numbers. 

Chapter 5: Prospecting Your Way to Listings and Sales y / 

Figure 5-1: 

Use a 


sheet such 

as this one 

to monitor 









Contacts Made 

Leads Obtained 

Listing Appointments Scheduled 

Qualified Listing Presentations Completed 

Buyer Interview Appointments Scheduled 

Buyer Interview Appointments Completed 

Qualified Offers Written 

"Real Working Hours" Invested 

Prospecting Hours 

Listing Hours 

Showing Hours 

Offers Hours 

Rate the Success of Your Day (1-10 scale) 


Manaqinq contacts 

To store your prospecting information and ensure your prompt and ongoing 
follow-up, use contact management software, such as GoldMine, ACT!, or sales- Also, look into real estate-specific software packages, such as TOP 
PRODUCER or Online Agent, which are designed to help you with your sales 
functions and also with business management, including market reports, corre- 
spondence templates, and even tracking your closings. 

Regardless of the system you select, you must be able to access your contact 
database with reliability and ease. 

Don't apply a shoestring budget when managing contacts. Minimally, you'll 
want to invest in a computer (preferably a laptop) and all the software neces- 
sary to build and run your business, from contact management to MLS 
access, to agency management. 

y £ P art " : Prospecting for Buyers and Sellers 

Budgeting for success 

You should always budget for ongoing self- 
improvement. Start with a budget for a ward- 
robe that presents you as a successful agent. 
Some people will make assumptions of who 
you are based on the waythat you're dressed. 
For that reason, always dress for success. 

Budgeting to attend every business seminar 
you can make time for is just as important as 
how you're dressed. Your personal education 
and skills-based training is fundamental to your 
climb up the ladder of success. 

In between, buy books and tapes, download 
podcasts, and getyour hands, eyes, or ears on 
every piece of media that can help you develop 
and efficiently use sales skills, mental focus. 

leadership, discipline, and motivation to 
increase your success. 

The most significant asset in your business 
right now is you, and ten years from now, the 
most significant asset in your business will still 
be you. Don'tfail to invest in yourself. I suggest 
to most of my clients that they should invest 10 
percent of their income in personal develop- 
ment. This 10 percent is for advancement of 
their skills and theirteam member's skills. As a 
newer agent, a couple thousand dollars a year 
to improve your knowledge, skills, systems, and 
techniques is not too much. I can say that I 
invested at that level and beyond, and it made 
the difference in the speed in which I achieved 
top producer status. 

Message in a Bottle: Staying in Touch 

A quality contact management system can be a powerful tool. It can trigger 
your next call to a prospect. It can keep all your notes in one place for easy 
retrieval. It can make interaction with your prospects, sphere of influence, 
and past clients simple. Here are some tips on how to use contact manage- 
ment software effectively no matter what brand you select: 

u* Each time you're ending a prospecting call, determine your prospect's 
time frame and decide when you need to speak again. Schedule the next 
contact right then and there. 

v* When talking to a past client or another prospect within your sphere of 
influence, schedule yourself to make the next call, but don't worry about 
asking the prospect. That way, the next time you call, they'll be pleas- 
antly surprised to hear from you. 

*<* In addition to calls, send e-mails to thank contacts for their time and to 
reiterate your service offer. 

«-" Obtain permission to add contacts to your monthly e-mail newsletter 

Chapter 5: Prospecting Your Way to Listings and Sales yj 

W Follow up with first-time contacts by sending them a copy of your 
agency brochure or a marketing piece. Or, send a just-listed or 
just-sold card to demonstrate your success as an agent. 

v Craft a personalized business letter that is perfectly typed onto your let- 
terhead and sent out in a matching envelope. 

But wait! Great as all of the above suggestions are for your business, none of 
them beat the all-time winning touch of a hand-written thank-you note. This 
type of note says to the receiver, "You were so important that I took the time 
to pen this in my own hand rather than touching a few buttons on my com- 
puter or spitting out a preplanned, standard issue, regurgitated letter that I 
have sent to 1,000 other people just like you. 

Most people get hundreds of e-mails a day — many of which they don't even 
want. They also receive hundreds of pieces of junk mail a month, mostly from 
credit-card and mortgage refinance companies. 

The hand-written thank-you note breaks through the clutter. It looks like an 
invitation to something special and keeps the relationship active until you talk 
again in a few days. It's still the best way to keep in touch in our technology- 
driven world. 

y£k Part II: Prospecting for Buyers and Sellers 

Chapter 6 

Mining Gold from Referrals 

In This Chapter 

Discovering the ins and outs of a referral-based business 

Developing a referral strategy that works 

Establishing and maintaining relationships with your referral base 

Salespeople love referrals. They're the sincerest form of compliment a 
client can give, and they're a remarkably cost-effective route to new 

The idea of attracting referrals is so popular that sales trainers who bill them- 
selves as referral gurus make fortunes promoting magical systems that sup- 
posedly deliver more referrals than an agent can handle, all in return for 
tuition at a three-day seminar. What they talk about for three days is a mys- 
tery to me. Referrals are really pretty simple. In this chapter, I tell you all you 
need to know. Success comes from perfect practice of the scripts and the 
referral-generating and referral-cultivating tactics that you find in the upcom- 
ing sections. 

Referral Truths and Consequences 

ijj^NG/ Before you turn even a moment of effort away from prospecting activities, 

and before you put all your hopes into winning business through a full-tilt 
referral-generation program, be aware that in addition to all the benefits that 
come with referrals, a 100 percent referral-based business has some down- 
sides. Proceed with awareness of these ironclad truths: 

V Truth #1: Especially for newer agents, over-reliance on referrals results in 
slow-growth simply because early in the agents' careers they don't have a 
large enough database of existing clients and contacts to draw from. 

y \) Part II: Prospecting for Buyers and Sellers 

v* Truth #2: Relying entirely on referrals for client development is a 

narrow, exclusive, and unbalanced approach. For one thing, if incoming 
referrals decline your services, you won't have other prospecting sys- 
tems in place to bail your business out of trouble. What's more, when 
referrals do come in, most will be for buyer prospects rather than seller 
prospects. What the referral gurus never reveal is that their approach 
develops buyers' agents — not sellers' agents (or listing agents), which 
are the ones who experience greatest success and build the strongest 
long-term real estate sales businesses. (Turn to the section "Becoming a 
listing agent" in Chapter 1 for more information about the benefits of 
becoming a listing agent.) 

Building a Referral-Based Clientele 

At its core, a referral is a recommendation. In its best form, a referral is a 
high-quality lead and a high-probability prospect that is introduced to you 
by someone both you and the prospect regard highly. 

A referral-based business is a business that generates most of its leads as a 
result of contacts provided by friends, family, clients, colleagues, and other 
associates. Sounds great, doesn't it? It is great, if — and here's a big if — you 
have a large sphere of influence and enough patience to wait out a lag time of 
at least 90 days (and most of the time longer) between when you begin to culti- 
vate referrals and when referrals begin to generate revenue for your business. 



Building a referral-based clientele is a long-term strategy rather than a quick- 
fix tactic. If you're looking for near-term results (and what newer agent isn't?) 
you're better off developing clients through a traditional lead-development 
program that involves prospecting (see Chapter 5), conversion of expired 
and FSBO listings (see Chapter 7), and open houses (see Chapter 8). 

Relying exclusively on referrals, especially when you're a new and undercapi- 
talized agent, is a quick form of business suicide that will move you out of the 
real estate industry within a year, guaranteed. Instead, consider referrals a 
second-stage strategy — one that follows your initial round of business devel- 
opment and contributes to the long-term growth and success of your business. 

Sources of referrals 

Most referrals come from current clients, past clients, people you've met 
through networking situations, and people you know through social or business 

Chapter 6: Mining Gold from Referrals y / 

dealings. The upcoming sections provide information for working with each 
group of potential referral contacts. 


Current clients 

Current clients are people you're actively representing, in real estate transac- 
tions. Current clients are a rich pool of referral opportunity mainly because, 
more than any other group, they have real estate on their minds. They're in 
the midst of deals that they're constantly talking about with their friends, 
associates, families, and neighbors. Their conversations revolve around their 
real estate wants and needs, their moving plans, and the latest real estate 
trends and market activity. 

If you don't ask your current clients to recommend you to their friends or to 
refer their friends to you for follow up, you're really missing out on a huge 
opportunity to reach potential prospects. You can bet that your name comes 
up in your clients' conversations, even if it's just to say they have an appoint- 
ment or that they're awaiting information from you. Putting in a few good 
words on your behalf would be a natural and easy thing for them to do. You 
just have to ask. You talk to your clients regularly to communicate about the 
sale of their home, the process of finding a home, their transaction progress, 
or their progress toward closing. During the course of those conversations, 
ask for referrals. 

Past clients 

Past clients are the people you've helped through real estate transactions in 
the past. They have firsthand knowledge of the quality of service that you 
provide. You need to show them that you want to provide the same level of 
excellent service to their friends and family by requesting their referrals. 

Clients you've recently served provide the most fertile opportunity, both 
because their experiences are fresh in their minds and because they're still 
buzzing about their recent move to anyone who will listen. Flip to Chapter 15 
for more info on how to best follow-up with your clients. 


In sales, networking is a buzzword for building business contacts into referral 


The objective of networking is to meet success-oriented people with whom 
you can exchange referrals, advice, counsel, contacts, and even wisdom. 
Ideally, networking results in professional relationships with others who 
are committed not only to their success, but to your success as well. 

yQ Part II: Prospecting for Buyers and Sellers 


The truth is that most salespeople talk about networking more than they 
actually do it. They attend a Chamber of Commerce or Rotary Club meeting, 
have an enjoyable lunch, visit with a few friends, and chalk the time up to net- 
working even though no new alliances were formed, no existing alliances 
were deepened, and no referral sources were generated. In other words, no 
true networking took place. 

To make networking work for you, follow these tips: 

*«* Network with the right mindset. When you network, set your sights on 
developing prospect recommendations, not just the names of leads. A 
recommendation or phone call to a prospect from someone that you 
have a referral relationship with is more valuable than just getting the 
name of someone thinking about moving. 

Many referral alliances are established with the single objective of gener- 
ating leads. Attendees hear of the names of new businesses, new man- 
agers, newly arrived residents, or others who are possibilities for your 
future contact. A lead from a networking associate is better than no lead 
at all, but it's a long cry from the name of a prospect provided by a refer- 
ral alliance who shares extensive background and then offers to put in a 
few good words on your behalf. 

*<* Acquire warm referrals. A warm referral begins when a networking 
associate makes contact on your behalf with a person who is in the 
market for your services. Warm referrals involve calls or correspon- 
dence that convey your qualifications, the quality of your service, and 
reasons why prospects should at least interview you for the opportunity 
to represent their interests in real estate transactions. 

When establishing networking relationships or referral alliances, work 
to gain a mutual agreement that those in the network will engage in the 
practice of exchanging warm leads. 

Business and social contacts 

Many people you meet socially or through business dealings never become 
clients. They may have previously established agent relationships or they 
may not be in the market for a real estate transaction. Nonetheless, they're 
important to your business because they're in a position to give and receive 

Notice the words "give and receive" in the previous sentence. The law of reci- 
procity is alive and well in 21st century business circles. It's the old tenet of 
"I'll scratch your back if you scratch mine." 

Chapter 6: Mining Gold from Referrals yy 


In his book, The Seven Habits of Highly Effective People (Free Press), Stephen 
Covey talks about emotional bank accounts into which successful people 
must make deposits before making withdrawals. Apply that wisdom as you 
build your referral network. Start by sharing business referrals, counsel, help, 
and wisdom with others, and before long the recipients of your kindness will 
repay you with similar efforts. By helping your friends, family, and associates 
build their own businesses, you'll, in time, gain their help in building yours. 

When dealing with your referral sources, your goal should be to provide more 
service and value than is expected. Also be sure to keep your accounts with 
others in the black, rather than in the red. 

Constructing a referral database 

One of the best ways to start generating referrals is to construct a referral 
database that includes all the people (and their friends) likely to help you by 
referring your services. 

If you're like most agents, your first list of business and social contacts will 
be embarrassingly short. That's because few people dig deep enough to think 
of all the people with whom they have business and social ties. 

To jog your memory, use the worksheet in Figure 6-1. Then list the names of 
people in each category who know and respect you and may be willing to 
refer prospects your way. 

Three golden rules for cultivating referrals 

To win referrals, you have to follow three important rules, and in this arena, 
close isn't good enough. Follow just two of the three rules and growth of your 
referral-based business will be stunted. Follow all three, and you'll open the 
floodgates to success. 


1. Be referable 

Unless you're referable, it's next to impossible to generate large numbers of 
quality referrals. And being a pleasant person isn't enough. To attract refer- 
rals, follow these tips: 

IV Do what you say you'll do and do it with excellence. People known 
for mediocre results never win the kind of accolades that lead to 

7 00 P art " : Prospecting for Buyers and Sellers 

Figure 6-1: 

List names 

of contacts 

in as many 

of these 

social and 




as possible 

to form your 

own referral 


Referral Database Worksheet 

Create a list of contacts in each category who may be willing to refer prospects your way. 








Property Mgmt. 




Rental Agencies 



Lawn Care 


Alarm Systems 




Animal Health/Vet 





Country Clubs 




Credit Union 




Day Care 






Shoe Repair 














Dry Wall 









Mutual Funds 










Beauty Salon 




Beeper Service 


Office Machines 

Sporting Goods 

Bible School 


Office Furniture 















Hair Care 









Pest Control 

Title Company 

Cable TV 





Health Club 



Carpet Cleaning 

Health Insurance 



Cellular Phones 



















Chapter 6: Mining Gold from Referrals / (/ / 

is* Know your client's expectations. The only way you can know what your 
clients expect from you is to ask. The typical agent thinks a client simply 
wants to get a home sold or find a home to buy, when in fact that end 
result tells you nothing about the client's service expectations. Ask 
your clients these questions: 

• What do you expect from the agent you choose to work with? 

• What are the top three services I could provide that would add 
value when working with you? 

• If you've worked with other agents in the past, what did you like 
best and least about the experience? 

is* Deliver exemplary service that exceeds expectations. Meet and exceed 
your client's service expectations and they'll become ATM machines for 
referrals. Follow these steps to secure clients for life: 

• Survey your clients on a regular basis to find out whether their 
needs are being met and how you can serve them better. 

• Become a recognized real estate expert and share your expertise 
by calling clients regularly with reports on market trends, equity 
growth, and investment opportunities. 

• Continue serving your clients after the sale closes. 

• Get to know your clients beyond their real estate needs. 

For more advice, flip to Chapter 15, which is full of tips for using service 
and follow-through to win clients, and their praise, for life. 

*<* Say thank you. This step is so simple, but in our what's-in-it-for-me 
world most service providers overlook the power it possesses. When 
was the last time your attorney, accountant, or banker thanked you for 
your business? When was the last time the person who pumps your gas, 
handles your dry cleaning, or bags your groceries thanked you for con- 
tinuously directing your service dollars into their paychecks? 

Extend your thanks verbally and put it into hand-written notes. Find 
simple and creative ways to express your appreciation to the people 
that put food on your table, gas in your car, dollars in your retirement 
account, and tuition dollars into your children's college education 
accounts. Your thanks will be rewarded with referrals. 

is* Admit and correct mistakes. If your service falls short, admit it, apolo- 
gize, and quickly make amends. 

/ (/£ Part II: Prospecting for Buyers and Sellers 


Sometimes, your most loyal clients — and strongest referral alliances — 
result from perfectly corrected mistakes. When things go awry, too many 
people put more effort into covering their tracks than righting the wrong 
and helping the client. Instead of wasting your energy trying to hide mis- 
takes, follow these steps: 

• Find out what the problem is and solve it quickly. 

• Once the problem has been identified, admit it was your fault. 
Diffuse frustration or anger by saying, "You're right; I blew it, 
and I'm sorry." 

• Tell him how you'll make amends. Once he knows that you're com- 
mitted to his satisfaction, the healing of the relationship can begin. 

• Follow up to find out whether the problem was resolved to the 
client's satisfaction and whether there is anything else you can 
do for him. 

2. Mine your contacts 

The first step toward mining — or extracting value from — your referral con- 
tacts is to segment your database into manageable subgroups. 

To mine your resources effectively you have to put most of your effort 
toward contacts with the highest referral potential. Contrary to popular opin- 
ion, you can't afford to treat all referral sources with equal attention. Unless 
you establish priorities, you won't have the time or energy to devote to those 
sources who will benefit your business the most. 


*<* Start by creating a top-level, or platinum, group of contacts. This cate- 
gory includes clients that were a delight to work with, people that are in 
key strategic positions, and friends and associates who are strongly 
likely to refer business your way. Go through your complete database 
looking for those contacts with the following traits: 

• People who understand your need for business referrals. 

• People who really like you and want to help you. 

• People who did business with you in the past and were highly sat- 
isfied by your service. 

• People who have previously sent referrals to you, even if the refer- 
rals never resulted in a commission check. 

The platinum group is your best group of referring partners or referral 
alliances, and you must treat them accordingly. They deserve personal 
attention and personal interaction from you on a regular schedule. You 

Chapter 6: Mining Gold from Referrals / Oj 

may want to contact this group by phone on a monthly or bimonthly 
basis. The secret is personal contact by phone or in person. 

You may even create a Top 20 or Top50 list within this group. This super- 
elite list merits your highest level of attention. Send them special and 
personal correspondence a couple times a year, and see them personally 
on a face-to-face basis a few times a year as well. Invite them to special 
client-appreciation events — or invite them in very small groups to 
attend functions or special activities with you — to further crank up the 
referral machine. 

*-" Create a second-tier gold level of contacts that you want to cultivate 
into platinum affiliates. 

This group will include influential people that are likely to refer but only 
if you meet a few conditions. You may need to ask them for referrals con- 
sistently over a period of time before they come through. Or you may 
need to achieve greater familiarity or top-of-mind consciousness before 
they're comfortable with the idea of sending business your way. 

To develop this group, take time to establish your credentials and com- 
petitive position (the information in Chapter 14 will help). By proving 
that you save clients more money, sell quicker, and handle smoother 
and better transactions, you'll, in time, develop advocates that send you 
referrals for years to come. You may want to contact this group once a 
quarter by phone or in person. 

If you give contacts in this group a stack of your business cards to hand 
out like candy, you're wasting your time. See the sidebar titled "How to 
trash your business card, fast." 

*«* Create a silver level of contacts for future cultivation. 

This group will include contacts that may refer someday, but the jury is 
still out regarding when and if. Still, because you know them and they 
know you, they deserve your attention and follow-up. 

The people in this group are in a position to refer business, but they may 
not be overly excited about you or, in some cases, any service provider. 
Include in this group people that you've only recently met, introverts, 
people with limited social circles, and people who are tremendously ana- 
lytical or demanding and whose need for proof and perfection may put 
the brake on their willingness to share referrals with others. Phone 
these silver level clients at least once or twice a year to maintain the 
personal contact with them. 

I believe that the key to driving referrals out of these groups is personal 
touch or interaction. Your ability to engage yourself in prospects' personal 

/ Oil P ar t " : Prospecting for Buyers and Sellers 

lives and to provide them with more than just the usual monthly newsletter 
will set you apart from the other agents in your area. 

Anyone that doesn't fit into the platinum, gold, or silver category has limited 
referral value to your business. Some trainers suggest purging iffy contacts 
out of your database, but I don't share that view. After all, how difficult is it to 
include the extra names when you distribute your e-mail newsletter monthly 
at absolutely no extra cost? Once the data is collected and contact permission 
is obtained, the hard work is over. All you have to do is click "send" on a regu- 
lar basis, and then stuff and send an occasional snail mail communication. 

Consider creating a bronze category just to keep remote possibilities in your 
contact circle. Especially when your overall database is small, you want to 
wring potential out of every hope. Inexpensive, regular contacts are a step in 
the right direction toward engaging the interest of these contacts and con- 
verting them into future referral sources. 

How to trash your business card, fast 

To rev up referrals, stop handing out your busi- 
ness cards. 

Before you write me off as crazy, let me clarify: 
Don't completely stop using your business 
cards. Continue using them to share your con- 
tact information following personal encounters. 
However, the trick is to completely stop asking 
others to hand them out on your behalf to those 
who may only be iffy prospects (at best) for your 
business. Understand this truth: Putting a busi- 
ness card into someone else's hands with the 
hope it'll get passed along is nofthe route to a 
new business relationship. It's only the begin- 
ning of a quick trip to the trash can. 

Many salespeople were taught to hand five 
business cards to clients with the request that 
they pass them out to friends that wanted 
to buy or sell real estate. Tracking studies 
have delivered the verdict on this approach: It 
doesn't work. Even if (a big if) your client is suc- 
cessful at passing your cards out to others, the 

recipients will rarely call you, and sales never 
follow. This low return (and high trash rate) 
makes this practice worthless. 

Instead of papering the world with business 
cards in a futile effort to get your contact infor- 
mation into the hands of prospects considering 
moves, turn your thinking upside down. Quit 
worrying about distributing contact information 
and start worrying about collecting it. 

When working with referral sources, make it 
your objective to secure names, addresses, 
phone numbers, cell phone numbers, work num- 
bers, and e-mail addresses for those in the 
marketto sell or buy. From there, you can reach 
out to pursue the leads. Instead of asking your 
referral sources to distribute a card, ask them to 
make a personal contact on your behalf. They 
can meet with or call the prospect in advance of 
your call and share your name and a little about 
the success you helped them achieve. 

Chapter 6: Mining Gold from Referrals / (/J 

3. Leverage your relationships 

In your everyday dealings, you come into frequent contact with people who 
you can easily lead up your relationship ladder and cultivate into referral 

For some agents, these daily encounters revolve around the lives of their 
children — through meetings with teachers, participation in school events, 
visits with other parents, sideline conversations at soccer and T-ball prac- 
tices, and on and on. If you don't have children, don't forget all the people you 
meet in church groups, golf or athletic clubs, neighborhood associations, and 
other social outlets. Cast your net carefully, and you'll bring many of these 
people into your referral circle. 

These social sources don't develop into referrals automatically. It's your 
obligation to let people know what you do, why you're the best, and how you 
deliver successful outcomes. Flip to Chapter 14 if you need help defining and 
presenting your competitive strategy. 

As you begin leveraging personal relationships, start by setting a high expec- 
tation for the quality of communication and service you'll deliver. At the 
same time, set moderate to low expectations for quick referral results. 
Cultivating acquaintances into referral alliances takes time, patience, 
and persistence. 

betfeiopinq l/aur Referral Strategy 

To develop referrals, you need to start with a referral mindset. You'll know 
you have an effective referral mindset when the following occur: 

f" Every prospecting, marketing, and customer service action is accompa- 
nied by the realization that the contact could lead not only to new busi- 
ness, but also to positive word-of-mouth and to the recommendation of 
your service to others. 

is* You create, believe in, and implement strategies that purposefully gener- 
ate referrals as a regular part of your business development activities. 

i^ You know that prospecting is the best route to referral success. You 
understand that in the same way (and often at the same time) that you 
prospect for client leads you also need to prospect for referrals. Chapter 
5 is jam-packed with advice on how to do just that. 

7 O P art " : Prospecting for Buyers and Sellers 



Generating referrals is among the easiest, most cost-effective ways to gain 
new business leads, but success doesn't happen overnight. Even your 
platinum-level referral sources need to be constantly contacted and reminded 
to send business your direction. The upcoming sections help you set your 
objectives and develop a system that first delivers the kind of service that 
wins recommendations and then transfers that value, through ongoing com- 
munication, into new business opportunities. 

Helping people send you the 
type of referrals you seek 

Before you launch a referral-generating effort, you need to know what you're 
looking for. After you know what you're looking for, you then have to let 
others know as well. In a sentence, you need to be able to tell your referral 
sources exactly what your ideal real estate prospect looks like. Include the 
following information: 

*«* Moments when people become great prospects. Help your referral 
sources notice the signs that indicate that their friends are in the "think- 
ing about moving" stage, because your goal is to enter the game before 
the transaction is already underway. Universal signs to watch for include 
pregnancy, recent adoption, promotion, transfer, trouble with aging par- 
ents, a recent empty nest, or trouble in a marriage or relationship. 

Left to their own good intentions, many people will call to tip you off 
about people they've just heard are in the process of buying or selling. 
By the time that a mutual friend hears that someone is actively looking 
to buy or is in the midst of selling, it's too late. By then, the prospects 
probably already have an agent relationship. 

*«* Your interest in helping people sell their homes. The standard con- 
sumer view of real estate agents is that they put people into their cars, 
drive them around, and sell them houses. If you don't expand this initial 
impression, most of your referrals will be for people seeking to buy 
rather than sell homes. Buyers are great clients and important sources 
of revenue, but the best agents build their businesses through listings. 
By cultivating referrals for those clients thinking about selling their 
homes, you'll put your business on a faster track to growth. 

v* Your real estate niche. If you're particularly effective at serving a spe- 
cific niche of real estate clients, such as investors, seniors, younger- 
generation buyers, or first-time buyers, let your referral sources know. 
Likewise, if you want to gain more of a certain kind of buyer or seller, 

Chapter 6: Mining Gold from Referrals / (// 


you need to inform your sources about your expertise in the desired 
segment and what prospects in that category look like. 

When communicating your market niche interests, start by sharing your 
overall competitive market advantage and inviting all referrals. Then 
explain the particular niche market expertise that you've developed and 
they'll think of you when they hear that their contacts have interest in 
your specialty area. 

The point of all this guidance isn't to get your referral sources to screen leads 
for you. Instead, the goal is to educate your sources. Make sure they know 
that you still want them to recommend the names of anyone who has interest 
in buying or selling property. In this case, less is not more. 

Setting yow goal 

In an especially effective referral-development program, you may aim to 
achieve two referrals a year, on average, from each of your platinum-level 
sources, one a year from those in your gold group, and one every other year 
from those in the silver category. Referrals from sources at the bronze-level 
are too hard to project, but for all other categories, you need to give yourself 
an annual goal to aim for. (For more on these levels, refer to the section, 
"Three golden rules for cultivating referrals," earlier in this chapter.) In the 
beginning, you may just pluck your goal from thin air. However, after you 
establish your first year expectations (or hopes), you'll have a good bench- 
mark against which to measure progress and set your future goals. 

As you set goals and track progress, consider these tips: 

*<* The number of referrals you aim to generate from platinum-level sources 
should be double what you expect from gold-level sources, and your 
expectations from gold-level sources should be double what you expect 
from silver-level sources. 

i* Whenever you receive a referral, note whether the source is listed in 
your platinum, gold, silver, or bronze categories. This will help you track 
whether those in each category are performing at the projected levels. If 
they're not, you'll know to enhance communications and general referral 
efforts accordingly. 

*<" As you qualify and work with referrals, note which of your database 
groups — platinum, gold, silver, and bronze — are delivering referrals 
that lead to business. If you notice that some categories are generating 
referrals that are dramatically more or less qualified than other cate- 
gories, study your own communications to see how your messages to 
those various groups may be contributing to strong or weak leads. 

/ (Jo Part II: Prospecting for Buyers and Sellers 


Approaching your referral sources 

Marketing for referrals with mailers, calendars, recipe cards, and other out- 
reach and appreciation efforts is nowhere near as effective as prospecting for 
referrals by making personal calls and requests. 

The hard truth is that most consumers stand a far better chance of finding a 
poor agent than a great one. Once you personally convince your sources that 
you're among the best in the field, referrals will definitely follow. 

When cultivating referral sources, realize that most people who send refer- 
rals your way do so for a variety of reasons. Above all, they recommend you 
for the following two reasons: 

*<* To create friendship and trust. People like to help those they like and 
believe in. Take time to get to know the contacts in the platinum and 
gold levels of your database, and let them get to know you. Share the 
vision you hold for your business. Let them catch your enthusiasm and 
buy into your dream. As a result, they will have a vested interest in your 
success and will be excited to help you achieve your goal. 

i^ To be champions. Every time you deliver superb service and an excel- 
lent outcome you create clients who are willing to champion your busi- 
ness. What's more, based on your exemplary performance, you create 
clients who know firsthand that by recommending you to others they'll 
become champions in the minds of their friends and family members. 

It's never too early in the agent-client relationship to begin building referral 
relationships. You can start during the first meeting or phone call with any 
prospect by using a script similar to the following: 

"Fred, I build my business primarily based on referrals from clients. The bene- 
fit to you is my focus will always be to give you the best service possible. The 
reason is I want to earn the honor to talk with you in the future about who you 
know that would benefit from my service. The only way I deserve to have that 
conversation is based on the job I do for you. I know that if you are delighted 
with my service, you will want to help me and your friends out. " 

When approaching referral sources, keep a few important rules in mind. 

Rule h Respect the referral process 

When you ask for referrals, you enter the hallowed territory of another 
person's treasured relationships. In ancient times, people would go through 

Chapter 6: Mining Gold from Referrals / (/y 

extensive purification ceremonies before even stepping onto holy ground. 
Asking for referrals is just about that special. 

Don't ask for referrals by simply adding a throwaway line onto the end of 
another conversation. For example, don't say, "Oh, by the way" before you 
ask for a business referral. That tactic minimizes the importance of the refer- 
ral, instead of raising it to the high level of honor and respect it deserves. 

A quality referral request should be take least five minutes. Ten minutes may 
be even more effective. 

My friend Bill Cates, a referral coach and author of the book, Ultimate 
Referrals (Thunder Hill Press), advises that you precede your referral 
request with the statement, "I have an important question to ask you." This 
statement forces a pause, builds anticipation, and sets the tone for a mean- 
ingful conversation. 

Rule 2: Ask for help 

If you're soliciting referrals, you are, in fact, asking for help. So say so. The 
trouble here is that many agents' egos get in the way. These inflated egos 
won't let the words out of most agents' mouths. "I need your help" or "I 
value your help" are powerful keys for opening the referral floodgate. 

Rule 3; Ask permission 

In particular, ask permission to explore your client's contact database — 
not by rifling through computer files but by hearing of and gaining access 
to associates you may be able to serve. When asking for permission, use a 
script like this one: 

"I'm delighted that I've been able to serve you. I was wondering about others 
you might know in your life that would also benefit from my service. Could 
we explore for a few moments who else we might be able to serve?" 

The final question in the script is an important one. Too many agents ask for 
referrals and then leave the burden of thinking up names on the shoulders of 
their clients. The truth is that your referral sources don't want to work that 
hard. They'll work that hard with you, but they won't do it alone. 

Rule ft: Get specific 

Don't just make a general request for referrals and leave it at that. Saying, 
"Do you know anyone you may like to refer to my business" is sort of like a 
department store clerk who asks, "May I help you?" The automatic response, 
at least 90 percent of the time, is "No, just looking." 

/ 7 (/ Part II: Prospecting for Buyers and Sellers 

Sharpen the focus of your request by leading clients into areas or niches in their 
lives where they have day-to-day relationships. Ask clients about potential refer- 
rals among the families at their church or workplace, people they know through 
their children's soccer team, or prospects they've met through school affilia- 
tions. If you know they're members of certain associations or groups, pull out 
the member roster and spend a few minutes talking about the names on the list. 


Asking the right questions 
at the right time 

Once they've asked for and received a referral, most salespeople stop and 
wait for the magic to happen. However, this moment is when Phase 2 of the 
referral-generation process kicks in. 

After a referral comes through, you want to thank your referral source imme- 
diately. After that, you need to determine the nature of the referral in order to 
determine the level of lead you'll be dealing with. To find out, ask the referral 
source the following: 

u* How do you know this person? 

u* How would you describe your relationship? 

v* What type of a personality will I encounter with this person? 

W What are a few of this person's personal interests? 

v* What organizations does this person belong to? 

u* Do you see anything that we have in common? 

Getting more than the prospect's name and number by asking questions and 
going the extra mile allows you to move the referral lead up to a higher prob- 
ability of conversion. 

Once you've found these answers, you can slot the referral into one of the 
four referral tiers: 

*<* C Level: Referrals in this category are cold. Your referral source has pro- 
vided you with the name and phone number of a potential prospect, but 
the source asks that you not use his or her name to create an opening. 

u* B Level: This referral is lukewarm. You have the prospect's name and 
phone number and permission to use the name of your referral source 
to open the door. Unfortunately, from now on, you're on your own. 

Chapter 6: Mining Gold from Referrals III 


v* A Level: This is a warm referral. You have the prospect's name and 
number. You have permission to use the name of your referral source as 
a door opener. To top things off, your source gave you time to ask ques- 
tions about the lead. This extra bit of time can improve your odds of 
connection with the prospect on the first call. 

u* AA Level: This referral is the whale in the referral fishing game. With a 
AA-level referral, you have all the resources that you have at the A level, 
plus you also have the insider's edge because your referral source agrees 
to contact the prospect in advance of your call to introduce you. This 
advance contact paves the way for a welcomed first call. It also can lead 
to a lunch or face-to-face meeting where you, your referral source, and 
your new lead get together to transfer the relationship into your hands. 

When you have the answers you need, thank your referral source again and 
offer your assurance that you'll provide the same level of quality service that 
he or she has received from you in the past. And don't forget to follow up 
with a handwritten thank-you note! 


Handling the referrals you receive 

Not all referrals turn into transactions. In fact, not all referrals possess the 
desire, need, authority, and ability necessary to qualify as likely prospects for 
your business. That doesn't mean that every referral isn't important to your 
business; it just means that not every referral demands the same follow-up 

When handling referrals, take these steps: 

1. Qualify the lead and determine the odds that your investment of time 
and resources will result in a commission check. 

Turn to the sections titled "Why and how to qualify prospects" and 
"Checking your prospect's DNA" in Chapter 9 for help. 

2. Develop only qualified referrals into client prospects. 

When working with referrals, agents often feel compelled to work with 
every lead, regardless of the person's qualifications or willingness to 
commit to an exclusive agency relationship. I believe this is an error. Ask 
yourself: If this person came from an ad call, sign call, open house, or 
any other lead generation system, would I pursue the business given the 
person's qualifications and commitment? Don't change your standards, 
expectations, or code of conduct simply because the lead was referred 
to you. 

112 P art " : Prospecting for Buyers and Sellers 


3. Thank and reward your referral sources for every single lead they 

Too many agents reward referral sources only when the leads they pro- 
vide produce a return in the form of a commission check. This is a huge 
mistake. If you train friends and associates to think that you only value 
referrals that result in closed deals, you run the risk of them prescreen- 
ing leads and passing along only the ones they think will result in sales. 
Reward and acknowledge each and every referral you receive. 

4. Keep your referral sources informed of the lead's progress. 

Especially if you're faced with the need to drop a prospect, let your 
referral source know what's happening. Explain that although this time 
the match didn't work out, you sincerely appreciate the recommenda- 
tion and are honored by the referral. Try to avoid the gory details as you 
walk the tightrope, sparing yourself wasted time while preserving the 
strength of your established referral relationship. 

beVeiopinq Referral Relationships 

After you've received a referral, gathered information, and ranked the lead, 
it's time to pick up the phone. The advice and scripts in the upcoming sec- 
tions help you at each step of the lead-conversion process. 

Making first-time contact 

The first call is the hardest one to make. Until you make first contact, you 
really don't know the quality of the lead. It could turn out to be a huge busi- 
ness opportunity — or nothing at all. You have to hope for the best because 
the referral lead could result in years of business and in an important new 
referral alliance. However, it could all go into the trash 60 seconds after you 
make the call. As you initiate contact with a new referral, heed the upcoming 

KnoW the Mo objectives of your first ca(t or Visit 

The primary objective of your first contact, like the objective of any other first 
sales call to a new prospect, is to book an appointment. The first appointment 
may take the form of an exploratory session aimed at determining the wants, 
needs, and desires of the lead, or it may be an appointment to conduct a 
buyer consultation or listing presentation. 

Chapter 6: Mining Gold from Referrals / / 3 


The secondary objective of your first contact is to open the door to establish- 
ing trust and respect, demonstrating your knowledge, and staking your posi- 
tion as a reliable resource. 

In your first contact, you're not trying to make a sale; you're just trying to 
achieve a face-to-face meeting. 

Use the name of your referral source to open doors 

The best way to break through your prospect's defenses is to share the name 
of your referral source. By presenting the name of your mutual associate, you 
establish immediate rapport and credibility. In your opening statement, 
include a reference to your referral source by using a script such as this: 

"Hello, Mr. Smith, this is Dirk Zeller with Real Estate Champions. The reason 
for my call is that your name came up in a conversation yesterday with Bob 
Jones with the Acme Delivery Company. " 

Then continue by using a linking statement, such as: 

"He said you're neighbors, " or "He said you use to work together, " or "He 
said your sons play soccer on the same team. " 

"Well, Bob Jones is a very valuable client. Bob knows I primarily work with 
referrals; he suggested I give you a call. He thought it would be worth a few 
minutes of our mutual time to see if we should meet. " 

You can also use the following variation: 

"Bob was pleased with the service I provided to him and his family. He 
thought you'd like to evaluate how I might be able to assist you in the 
future. " 

Concerting referrals into clients 
or referral sources 

Once you've established a solid opening connection, it's time to ask probing 
questions that help you determine the wants, needs, desires, and expecta- 
tions of the lead. Depending on your findings, the lead may result in a quali- 
fied prospect that you convert into a client. Or you may determine that while 
the lead isn't ready to buy or sell or to commit to an exclusive agent relation- 
ship, the person is a valuable resource to be added to your referral database. 

/ / [1 Part II: Prospecting for Buyers and Sellers 

Use the techniques shared in Chapter 5 to assess the lead's business poten- 
tial and to gather the information you need. 

Personal Visits and catts 

Leads generated through referrals come with a higher client-conversion prob- 
ability than leads received from ad calls, sign calls, or any other cold sources. 
Due to that fact, consider investing some additional time as you launch the 
relationship. Instead of, or in addition to, a personal call, consider stopping 
by to personally meet your new leads in their home. Once they attach a face 
and voice to your name, they'll find it more difficult to reject you or select 
someone else to represent their interests. 

If a personal visit isn't possible, aim to enhance the sense of personal connec- 
tion through an increased number and frequency of calls. It takes, on aver- 
age, four to six calls for you to leave a lasting impression. 

Written notes, e-mail messages, and mailers 

Between calls and personal visits, build a bridge with personal notes and 
e-mail messages. Written communications will never replace the personal 
touch of phone calls or face-to-face visits, but in between live contact they 
do a great job of keeping the connection alive. 

Send market updates, testimonials, letters from other satisfied clients, infor- 
mation on your current listed properties, and news about key awards or 
recognition you've received. 

Treat leads as if they're already your clients by adding them to your newslet- 
ter list and to insider mailings lists that share news from your office. 

Chapter 7 

Winning Business from Expired 
and FSBO Listings 

In This Chapter 

Converting expired listings into new listings for your business 
Securing for-sale-by-owner, or FSBO, listings 
Staying targeted, competitive, and resilient 


■ f you've been in the real estate business for any time at all, you've proba- 

«S bly already sensed that many agents have a preconceived negative impres- 
sion of expired listings and for-sale-by-owner listings, or FSBOs. These agents 
act as if these listings represent second-hand goods that aren't worthy of 
their interests and abilities. These same agents may also look down on fellow 
agents who work expired or FSBO listings. As a result, they turn their backs 
on tremendous revenue potential and literally thousands of annual listings. 
And that's great news for agents like you who can reap great success by con- 
verting expired and FSBO listings to new listings for your business. 

I honestly believe that agents who work, or have worked, expired and FSBO 
listings with successful outcomes are the best salespeople in the real estate 
industry. They prove they're skillful in sales, time management, prospecting, 
lead follow-up, presentations, objection handling, and closing. They know how 
to put their sales skills to work to book appointments, make presentations, and 
persuade potential customers to become clients. As a result, they make more 
money and have more listings than agents who don't work these two areas. 

^tRBift Even though both expired listings and FSBOs are great sources for generating 

listings, these must not be the only revenue streams you spend your time 
generating. You must have at least three areas from which you create leads, 
revenue, and listing opportunities. Expired listings and FSBOs can be time- 
consuming if done correctly, but they're certainly worth it. You have to find a 
mix that works well with the amount of time, effort, and energy you plan to 


Part II: Prospecting for Buyers and Sellers 

spend working these and other areas of business generation. The truth is that 
you can't attack ten different lead generation models as once. You have to 
select the best handful to use to generate your listing business. 

If you like the idea of being a successful agent who works these areas, read 
on. This chapter reveals why and when to pursue expired and FSBO listings 
and how to convert others' past real estate sales failures into your own suc- 
cess stories. 

Three Reasons to Work Expired 
and FSBO Listings 

Any new agent with aspirations to climb all the way to the top tier of success 
in residential real estate should consider working expired and FSBO listings 
for three good reasons: 

i^ They're easy to find. You don't even have to ask the owners if they're 
considering selling. All you have to do is notice the For Sale By Owner 
ads or signs or scan the MLS files for property listings that expired with- 
out buyer offers. It's hardly rocket science. 

i^ They exist in any kind of market condition. You read that correctly. If 
you're skilled at converting expired and FSBO listings, market conditions 
will have little bearing on your income and overall success. Here's why: 
In a market that is experiencing sluggish sales, buyers are in control and 
listings move slowly, if at all. As a result, a large number of listings expire 
each day, week, month, and year, providing you with a near-endless 
supply of conversion opportunities. On the flip side, when the market- 
place is robust and listings are moving briskly, sellers enjoy quick sales, 
high list-to-sold ratios, and multiple offers. In this environment, an abun- 
dance of FSBOs sprout up. Consumers, due to what they see and read in 
the media, think selling a home is easy. So, they devalue the services of 
real estate agents and try to sell on their own. 

Agents who work expired and FSBO listings can make their businesses 
bulletproof by simply shifting their listing emphasis to fit market trends — 
focusing on expired listings in sluggish markets and on FSBOs in brisk 

v Working expired listings and FSBOs provides the best training an 
agent can get. No question about it, if you're going to convert four, five, 
or even six expired or FSBO listings a month, you're going to become a 

Chapter 7: Winning Business from Expired and FSBO Listings / / / 

great salesperson. I'm not going to whitewash the truth: You'll work hard 
getting there. But, the rewards — in terms of self-discipline, time man- 
agement, sales skills, personal confidence, and, last but certainly not 
least, a whole lot of money — make the effort well worth the investment. 

Turning Bad Listings to Good Business: 
The ABCs of Expired Listings 

When an owner and agent agree to work together to sell a property, they sign 
a listing agreement that is valid for a specific length of time. Unless the home 
sells and closes within the specified time period, or unless the owner and 
agent agree in writing to extend the time period, the listing expires. 

Many agents don't even try to win listing extensions because they're embar- 
rassed to ask for them. They didn't get the home sold during the term of the 
listing, so they assume the owner will not grant them additional time to sell 
the property. To avoid the owner's rejection, they avoid the conversation 
altogether. Their reluctance leads to the opportunity for the assertive agent 
to move in and convert the expired listing to a new piece of business. 


Securing an expired listing is a pretty simple process that many agents make 
more complicated than necessary. 

Basically, to win an expired listing, all you have to do is make a phone call or 
series of phone calls. Yet agents create complex and elaborate systems 
involving extensive postcard mailings followed by sales letters and direct 
mail packages. They jam the owner's mailbox with cute, clever, and even 
corny packages, postcards, and letters. They create envelopes that look like 
they contain express deliveries. I've even seen agent-created mailers shaped 
to resemble firecrackers which, when opened, reveal the message, "Bang! 
Your listing is dead." And you wonder why people call it junk mail. 

The agents who actually take the time to work expired listings and rely exclu- 
sively on direct mail win a distant second place behind those who call directly 
or use a call and mail combination. An owner with a ready-to-expire listing is 
flooded with direct mailers, all competing to be the one that grabs the owner's 
attention and interest. However, what grabs attention is personal contact. 


Finding expired listings 

If you're a listing agent, the two biggest questions you face are: "Who do I 
call?" and "Where do I get seller information?" If you're working to convert 
expired listings, the answers are right here at your fingertips. 

118 P art " : Prospecting for Buyers and Sellers 

Follow these suggestions: 

i>* Read the daily MLS hot sheet, where each day most MLS systems post 
newly expired listings under the category, "expired listings." 

«-" Search the MLS file by entering "expired" as your search parameter. 

*«* See if your market's MLS system is among the few that allow agents to 
identify in advance the date listings are set to expire. Most MLS systems 
block an agent's ability to see when another agent's listing will expire; 
however, some don't. If your MLS provides the expiration date, you can 
print information on properties that are due to expire within the next 
few days and be prepared to move when the time arrives. Don't jump the 
gun, though — make sure you let listings expire before declaring them 

I admit that I'm not a fan of agents being able to see in advance when a listing 
will expire. Access to too much information is bad for a couple reasons: 

is* Knowing the expiration date can be detrimental to sellers: When 
agents know that a listing is about to expire, showings diminish. For one 
thing, agents consider the property "picked over." Also, they sometimes 
hold off showing it to prospective buyer clients, hoping that by waiting 
they can win the listing and therefore represent both the seller and the 

v Knowing the expiration date can be tempting to some agents: 

Contacting a seller in advance of a listing expiration is a clear violation 
of the code of ethics for real estate agents, but unfortunately that doesn't 
stop some agents who wander into the gray area when they're desperate 
for a listing. The vast majority of MLS systems block agents from viewing 
the expired listing before its time, but when the date is revealed a few 
agents use the information and lower the standard of ethics for the 
whole industry. 

Treating expired listings as 
high-probability leads 

With the seller's information in hand, you're ready to proceed with what I call 
a high-probability lead. Leads come from many sources: Internet inquiries, ad 
calls, sign calls, and cold calls. Some deliver possible leads; others deliver 
probable leads. The difference lies in the likelihood that the leads will con- 
vert to business. For example: 

Chapter 7: Winning Business from Expired and FSBO Listings J J y 


Iv Possible leads convert less than half the time 
v* Probable leads convert far more often. 

Working probable leads is much more efficient for a real estate agent, and it's 
difficult to find a more probable lead than the owner of a home with an expired 
listing. The owner has demonstrated the desire or need to sell and shows the 
existence of a problem you can help solve. The problem, of course, is that after 
waiting out the entire listing period, the owner's home didn't sell. However, the 
problem, in most owners' eyes, is that the previous agent didn't perform well. 
In more than 90 percent of the cases, though, the real reason the home didn't 
sell is because it was overpriced. More than half of the time, these homes go 
right back on the market with a different agent — why not you? 


Enqaqinq an expired listing 

Working expired listings is an all-or-nothing game. However, this shouldn't be 
the only area you generate leads from. Instead, make expired listings just one 
of your pillars of business. Also, you can't proceed in a half-hearted, here- 
today-gone-tomorrow fashion. Either you work expired listings — every day 
and on a consistent basis — or you don't. You can't try to work expired list- 
ings for a few days when you find yourself low on listings, and then quit for a 
few weeks only to return to the effort again later. You won't find a business 
card stating that an agent is a kind-of-expired agent. If you want to capitalize 
by converting expired listings, be ready to make working expired listings 
your way of business life. 

As a new agent, my work life revolved around expired listings. I realized that 
in any given month a majority of listing expirations occurred over the course 
of a few days, and that is still the case today. Up to one third of all the listings 
that expire occur over the last few days of the month and the first day of the 
new month. If you're going to work expired listings, get ready to make those 
days very long work days. 

I followed this routine: 

*<* I'd arrive at the office around 6:00 a.m. and immediately print out the 
expired listings. Some days I'd end up with more than a hundred listings 
on my desk. 

i^ At 6:30 a.m. one of my staff members, who usually arrived at 7:30 
a.m., came in to start researching phone numbers that weren't listed 
on the MLS printout. We searched four different sources for missing 
numbers: We first searched the Coles directory. Then we would move on 

/ 20 P art " : Prospecting for Buyers and Sellers 


to the MLS Metro-scan search. If we still didn't have the phone number, we 
would search the Internet through the Yahoo! people search. Finally we 
would package the rest up for the title company to search the tax records. 
We asked that the title company have those back to us before 9 a.m. 

At times, I have also called the previous agent to ask for the seller's 
phone number. I'd offer them some of the commission if they were will- 
ing to give it to me. The reason I did this is because if I get the number, 
and few other agents in the market have it, I have a higher probability of 
securing the listing. 

W Based on gut instinct, market knowledge, and the information con- 
tained in the MLS printout, I'd sort the properties by quickly deter- 
mining why each didn't sell and putting the ones that offered the 
highest probability of listing conversion and sale on top. Also, I'd 
move to the top of the list promising properties located in areas 
where I really wanted listings. 

V I would then practice my scripts and dialogues, taking time to antici- 
pate the objections I may hear from the seller and practicing how I'd 
overcome the barrier. I knew before placing a phone call to the owner 
that my objective was to move beyond any objections and to secure an 

*<* After 30 minutes of practice, by 7:45 a.m., I was on the phone, aiming 
to reach people before they went to work and before other agents 
began making contact later in the morning. 

Today, your schedule is dictated by limitations stipulated by state and 
national No Call Laws. For information, see the upcoming sidebar titled, 
"Keep it legal! Following the rules of the No Call Law." If you can't secure 
the phone number because of the No Call Laws, or you simply can't find 
the number, go to the door directly using the scripts, dialogues, and sur- 
veys in this chapter. You'll see fewer people, but you'll be more effective 
because you're face to face (and many people prefer talking face to face). 

*«* My goal was to be the first to get through to the owner of every 

expired listing, but obviously that isn't always possible, especially on 
a day when the pile of listing printouts reaches a hundred or more. 

Once I got through, scheduled an appointment, and established a good 
connection and sense of trust, I'd warn the owners about the number of 
calls they'd receive over the course of the next 24 to 48 hours. I'd sug- 
gest that to avoid interruptions they unplug their phone for the day. I 
knew that if the owner could dodge the calls over the first day or two 
following the listing expiration, most agents would quit trying to get 
through. See the upcoming section "Calling the seller: What to say and 
how to say it" for more info about contacting owners of expired listings. 

Chapter 7: Winning Business from Expired and FSBO Listings I 2 1 

Keep it legal! Following the rules 
of the No Call Law 

Many agents cheered when the No Call Law 
took effect. With the stroke of a political pen, 
they were handed an excuse for not picking up 
the phone. When real estate company execu- 
tives asked me whatthe law would mean to our 
industry, I answered truthfully: The effect will 
be negligible; 97 percent of all agents don't 
prospect anyway, so the new call restrictions 
affect only a miniscule segment of agents. The 
consumers are delighted with the No Call Law, 
butmost salespeople are even happierwiththe 
built-in excuse. 

Today, with over 100 million people on the No 
Call list, it's here to stay. The only salespeople 
who aren't affected are charities, fund raising 
organizations, consumer surveying groups, and 
politicians. Imagine that! Politicians created a 
loophole for themselves. 

Within the law, you can still prospect. You just 
have to follow the rules: 

f You can turn your call into a survey. You 

can collect information on home buying 
trends, real estate services, consumer 
expectations of real estate agents, or a mil- 
lion other aspects of the industry. 

f You can gain advance permission, prefer- 
ably in writing, to place calls. For example, 
at the bottom of your open house sign-in 
sheet, buyer interview data form, or e-mail 
newsletter subscriber form, include a per- 
mission statement. By signing, prospects 
grant you permission to call them with 

updates on market activity and their equity 
position. With this signed statement in 
hand, you have carte blanche permission to 
call the prospects until they tell you to stop, 
at which time you must stop immediately. 

y You can call within the boundaries of the 
law's inquiry provision. This provision 
allows a salesperson to make follow-up 
calls for 90 days after the initial contact. 
Use this 90-day period to make the sale or 
prove your value so that the prospect 
grants you written permission to become a 
regular contact. 

i^* You can call within the law's 18-month 
after-the-sale provision. This provision 
allows a salespersonto make contact over 
the 18-month period that follows the last 
purchase, last payment, or last delivery of 
services. In some cases, this provision cre- 
ates a never-ending prospecting opportu- 
nity. For instance, every single month you 
make a credit card payment, you essen- 
tially give your credit card company per- 
mission to contactyou for another eighteen 
months — permission that won't expire 
until 18 months after the date when you 
finally make your last payment. 

Every three months, obtain from your broker a 
current list of all contacts that your company 
has permission to call with a sales script. As a 
real estate agent, it's essential that you work 
inside the parameters of the law. The fine for 
one offense is $11,000. 


The key to success with expired listings is to work them consistently and with 
commitment. Most agents who claim to work expired listings do so only at the 
end of the month and, even then, only sporadically. I never took a vacation at 
the end of the month, because I didn't want to miss the flood of expired listings 

/ 22 Part II: Prospecting for Buyers and Sellers 

when they came through. And, in between, I also watched for the three, four, or 
five listings that expired on a daily basis. Only a small group of agents work 
expired listings as a way of life, but I can vouch for the fact that those who do 
build great businesses. 


Qualifying expired listings 

When working expired listings, get ready to work with owners who are frus- 
trated that their homes didn't sell and who, in most cases, blame their agent 
and, by association, all agents in their real estate market. Many also blame 
the marketing strategy, the marketplace, and the lack of effort put forth by 
the real estate community. They're not happy campers. 

In most cases, the blame is misplaced. The real culprit is usually the price the 
owners expected to reap from their property sale. If you help them dive back 
into the market with the same unrealistic price expectations, you'll set your- 
self up for another unhappy ending. 

Your ability to qualify the owner's level of motivation to sell at this time, 
along with the current market conditions, will determine your likelihood 
of receiving a commission check. To help qualify your clients, find out the 

u* Are they determined to acquire a buyer at their current inflated sales 

is* Which is more important: To obtain their desired price or to secure a 

*«* Are they open to discussing the true market value of their home? 

What you're trying to find out with these questions is whether the owners 
have to sell or just want to sell. Someone who is forced to sell is a higher- 
grade prospect, and is more likely to result in a sale — and a commission 
check — than someone who is just testing the market. Sellers who are being 
transferred to another part of the state or country, who have financial diffi- 
culties, who are expecting a child and living in a home that is too small, or 
who are going through a divorce usually have to sell. While some of these sit- 
uations are uncomfortable and unfortunate, they create opportunity for an 
agent who can help them come to a successful conclusion. 

Take time to ask questions and probe answers to find out the client's situa- 
tion. Many prospects are reluctant to reveal the reasons behind their deci- 
sion to sell. Some feel an agent may try to take advantage of them — and 

Chapter 7: Winning Business from Expired and FSBO Listings / £j 

unfortunately in a few select cases, they may be right. The vast majority of 
agents I've ever met, however, want to help people achieve their dreams and 

The best way to extract the information that you need from clients is to keep 
asking questions. If you don't manage to get the answers but you feel that the 
prospect has motivation, ask for a quick appointment to preview the home. 
By getting in the door and meeting face to face with a seller, you stand a 
better chance to get your questions answered while also having a look 
around the property. 


Catting the setter: What 
to say and how to say it 

When you call the owner of a home with an expired listing, you have one 
objective: To secure an appointment for a face-to-face meeting. Remember, 
the owners will likely be contacted by dozens, if not hundreds, of other 
agents, so you need to move quickly and skillfully by following this advice: 

*«" Address their situation. Quickly convince the owners that if they 
choose to work with you, the outcome will be different than the last 
time. Explain why working with you provides them a higher probability 
of sales success than they'll receive by working with any other agent. 
(Turn to Chapter 14 for help defining and concisely explaining your 
unique and strong competitive position.) 

w* Be proactive. The most serious sellers will re-list their home within a 
couple of days of a listing expiration. To land the listing, you can't be 
low-key with your dialogue and delivery. These owners are ready for 
action. You must convey power, conviction, and belief in your ability to 
achieve success. 

I j>* Leave yourself wiggle room. At this stage in the game, you may not be 

aware of all the factors. You don't know the condition of the home, the 
neighborhood layout, the level of access the owners are granting to 
buyers, the price and time frame they're trying to achieve, the probabil- 
ity that their expectations can be met, and what the previous agent 
really did over the course of the listing term. 

Because so much is up in the air, you have to leave yourself a little 
wiggle room by not overcommitting to what you can and can't do for the 
client. You also don't want to commit to what you would charge in terms 
of commission. You need to be flexible depending on the market and 
motivation of the prospect. 

/ £ll Part II: Prospecting for Buyers and Sellers 

u* Turn the most frequently asked questions to your advantage. Be ready 
to answer the questions, "What will you do differently?" and "Why did 
my home not sell?" by saying that you don't have enough information to 
give an accurate answer. You can say something like: "Are you asking me 
to guess, or do you really want to know for sure?" When they say, "I want 
to know for sure," you book an appointment to see the house and have a 
friendly discussion. With that helpful move, you get your foot in the 

u* Gain information. The owners need to understand clearly that, without 
firsthand knowledge of their situation, it's impossible for you to deter- 
mine which specific approaches would achieve their desired outcome. 
You need to see their home in order to review its features, benefits, con- 
dition, and curb appeal. 

You also need to figure out the previous agent's marketing strategy. Ask 
the seller what the other agent did to market their property. If you can, 
get previous agent's flyers, ads, and brochures. Taking a look at the pre- 
vious agent's Web site may also help. Finally, you need to gain an under- 
standing of the owners' expectations regarding time frame, listing price, 
sales price, and access for showings, as well as their interest in your 
evaluation of the competition they face in the current marketplace. 

u* Differentiate yourself. Use your track record (or your firm's track 
record if you're new in the business) to gain credibility with the owners. 
(See Chapter 14 for tons of advice on how to use the Big Three Statistics 
to differentiate and position your service.) As you present your success 
story, do so with the caveat that your success is based on your outcome 
with clients who sought your counsel, accepted your recommendations, 
and implemented your advice. Tell the owners that you want to con- 
tribute to a similarly successful outcome on their behalf. You may even 
want to supply references of satisfied clients — especially those clients 
whose listings were also expired before you began working with them. 

u* Provide the option of an easy exit. The seller with an expired listing 
most likely wanted to fire the agent long before the listing term was up, 
but in most cases, was bound by the contract terms to wait out the 
agreement. Acknowledge your understanding that the owners feel cau- 
tious about tying their home up for another long period of time. To put 
the owners at ease, offer them an easy-exit listing agreement or include a 
100 percent satisfaction-guaranteed clause. Either approach allows the 
owner to sever the agreement any time before it expires, which greatly 
reduces the perception of risk they may have about committing to 
another agent. 

Chapter 7: Winning Business from Expired and FSBO Listings / £j 


Safes skiffs 

Winning expired listings is the result of superb sales skills, including the 

is* Daily prospecting 

v* Focused dialogue 

*<* Strong delivery 

V Solid ability to handle objections 

v* Compelling description of the unique benefits you offer 

t^* Ability to win appointments that end in listing agreements 

As you initiate contact after the owners' previous listing has expired, your 
first objective isn't to convince the owners to re-list with you. Instead, your 
initial aim is to pique their interest and to make a compelling argument 
regarding why they should take the time to see your presentation. The 
sample scripts in the following section can help you plan your approach. 

Sample scripts 

Following are some sample scripts that you can build on when making initial 
contact with the owner of an expired listing. No matter which script you 
follow, remember this: Don't get sidetracked. Stay focused on your single 
objective, which is to secure an appointment with the owner. 

Expired Script 

Hi, I am looking for . 

. (re-state the name). This is . 


Is your home still available? 

When do you plan to meet with agents about the job of selling your home? 


I noticed your home was no longer on the MLS. I was calling to see if you 
still wanted to sell? 

1. When you sell this home where are you hoping to move to? 

2. Did you have a time frame to get there? 

3. What do you think caused your home not to sell? 

4. How did you select your previous agent? 

7 2 O P art " : Prospecting for Buyers and Sellers 

5. What are your expectations of the next agent you choose? 

6. Has anyone shared with you the real reason your home failed to sell? 

7. There are only a few reasons homes fail to sell: exposure, changes in 
market competition, and price. One you control, one the agent controls, 
and one no one controls. Which do you think it is? 

8. Let me ask you . . . do you want to know which one for sure? 

9. All we need to do is meet for fifteen to twenty minutes and take a look at 
your home. Would or be better for you? 

Response to the objection that all agents are alike 

Boy, I can sure understand where you get that impression and feeling. And I 
know the kind of frustration you feel, because I've felt it myself when I've 
taken over listings like yours only to find poorly written and prepared offers. 
Mr. and Mrs. Seller, there really is a difference in agents. If there weren't, we 
would all be doing the same level of business in terms of listings, sales, time 
on the market, and list-to-sale price. And we 'd all have the same level of 
client satisfaction. Wouldn't you agree? 

So the real question is what's the difference, right? I would be delighted to 
spend just a few minutes with you to help you understand the differences. 
Would or be better for you this week? 

Response to the question "Why are you calling me now?" 

It sure seems like a lot of people are calling, doesn't it? Your home's listing 
came up as expired, so I am calling to see if I can be of service. In order for 
me to accurately assess my ability to help, I need just a few minutes of your 

time and to see your home. Would or be better 

for you this week? 

Response to the question "Where were you when my home was listed?" 

That's a great question, and I'm sure this is a source of frustration for you 
right now. I can assure you that I personally take the responsibility of selling 
someone 's home very seriously. In many cases, my clients have entrusted 
their largest asset to me. 

Because of that trust, I work almost exclusively to ensure their sale. With a 
98% success rate against the market average of 68% success rate, I must be 
doing something right. Wouldn't you agree? When would be the best time for 

us to meet to evaluate your situation? Would or be 

better for you? 

Chapter 7: Winning Business from Expired and FSBO Listings I 2/ 

Entering the For-SateSy-Outner World 

Converting FSBO listings involves a process that in a number of ways is simi- 
lar to working with expired listings. However, the key differences between the 
two areas are 

*<* Timing. Most expired listings are re-listed and back on the market within 
a matter of days while FSBOs convert at a much slower pace. If you con- 
tact the owners of a FSBO, you can usually expect them to take at least a 
few additional weeks to try and sell on their own before they commit the 
listing to you. 

u* Sales approach. When working to convert an expired listing, you need 
to take control in order to prevail over a bunch of other unknown agents 
who are vying for the same listing. The owners of the expired listing 
rarely have an agent preference at this point. Their "first-choice" agent 
was the one whose sign just came down. This isn't always the case with 
FSBO owners, who sometimes have an agent in the wings just in case 
they don't have success on their own. For this reason, you need to take 
a lower-key approach and work to build a relationship in order to win 
over the FSBO listing. 


Why bother With FSBOs? 

When the marketplace is active and everything in sight seems to be selling, as 
has been the case over the last few years, FSBO listings abound and FSBO 
owners achieve a reasonable sales success rate without the services of an 
agent. So, you may be wondering why an agent would even spend time trying to 
convert FSBOs to agent-represented listings. Here are just a few good reasons: 

is* FSBOs are simply too tempting and attractive a market segment not to 
work. You know who these owners are because they're actively market- 
ing their presence in the marketplace. You also know they have motiva- 
tion or they wouldn't be spending the money to advertise their home for 
sale. It doesn't make sense to ignore this great market segment, though 
most agents do. 

i** Owners of FSBOs are qualified, motivated sellers. Clearly, they want to 
sell, but they likely don't realize the odds of the game they're playing. 
According to NAR, less than 30 percent of the people who try to sell 
their own homes accomplish the task of selling and closing their 

/ 28 P art " : Prospecting for Buyers and Sellers 

is* Owners of FSBOs are viable client targets. Unlike other prospective 
clients, you don't have to wonder whether they own their home, 
whether they're serious about selling it, and whether they have the 
authority and ability to conduct the deal. 

*«* Owners of FSBOs are easy to find and reach. One of the most difficult 
steps in the sales process is locating prospects in need of your service. 
With FSBOs, like expired listings, you know who your prospects are, and 
you know how to get in touch with them. Reaching FSBOs is easier than 
reaching expired listings because FSBO sellers want to be found, as 
detailed the section "Finding FSBO listings" later in this chapter. 

is* The vast majority of FSBOs fail to sell without an agent. Even in a 
robust market, fewer than 30 percent of FSBOs sell themselves. This 
means that more than 70 percent of the owners, if they want to sell, will 
eventually enlist the services of a real estate agent. 

is* FSBO sellers often net lower prices than those achieved by agent-rep- 
resented sellers. Among the 30 percent of FSBO homes that result in a 
sale, most are priced right at or below fair market value. In fact, to FSBO 
sellers, price is the primary marketing ammunition. The only reason a 
buyer would take the additional risk of working with a FSBO is that 
they're trying to buy a home for less money than they'd spend on a tra- 
ditional transaction. The problem is that low price is exactly the oppo- 
site of what the homeowner is trying to achieve. 


More than eight out of ten serious FSBOs end up as agent listings within a 
reasonable period of time — usually four to five weeks. Originally, owners set 
out to sell their own homes for one reason: They want to save money by not 
paying the agent commission. They view the real estate commission that an 
agent earns as too much pay for such an easy job. They think that money 
would be better spent when put toward an additional down payment or a get- 
out-of-debt plan. They ask themselves, "How hard can it be?" as they pound 
the FSBO sign into their front yard. In the back of their minds, many think, 
"Let's give it a go. We'll probably meet a few agents along the way, so we can 
always change our minds." And most do. After a month of the hassle, time, 
energy, emotion, and stress of trying to sell their own home — after running 
ads, fielding phone calls, holding open houses, and showing parades of 
people through their home — 90 percent of homeowners rethink their situa- 
tion. Fortunately for agents, selling a home isn't all that easy. 

Finding FSBO listings 

Because FSBO owners want to be found, you don't have to look far. Just do 
the following: 

Chapter 7: Winning Business from Expired and FSBO Listings I 2y 


*«* Check the newspaper. Because one of the primary advertising avenues 
for FSBO owners is still print media, the newspaper is a great place to 
look for FSBOs. The serious ones advertise regularly, spending a couple 
hundred dollars a week on classified ads to promote their home. Most 
don't realize how fast the expense will mount up. They start out with an 
advertising blitz for the first few weeks and then scale back as the reality 
of the expense they're incurring becomes apparent. You can use their ad 
volume to gain information and to track sale progress. 

i^ Drive around. Some owners quit advertising after a few weeks, and 
others never start. But they all put signs in their yards. So that you don't 
miss out on any FSBOs, drive through your geographic area and area of 
business at least once a month. 

is* Enlist the help of family and friends. Ask family members and friends 
to be on the lookout for FSBOs. When I first got into real estate sales, 
and I worked FSBOs, I would get a call each week from my mother and 
my older brother, each calling with the addresses and phone numbers of 
FSBOs they'd recently seen. They'd even share their first impressions 
and offer to fax me the home flyers that they pulled from the yard signs. 
Without my army of helpers, it would have taken longer to learn about 
many of the FSBO homes I subsequently listed for sale. 

*<* Subscribe to Landvoice. Landvoice is a company that compiles informa- 
tion from FSBO newspaper ads, FSBO Web sites, and other real estate 
sources to provide you with a complete list of FSBO opportunities in 
your area. For a low monthly fee, they deliver daily e-mail lists of the 
most recent FSBOs right to your desktop. With a subscription you also 
get full access to a searchable six-month FSBO history. You can't beat 
the service. It allows you to redirect the hours of time you spend on 
research into time spent calling FSBO contacts and winning over new 
listings. You can reach them via their Web site at www. landvoice . 
com/dirkzeller. They offer a special package of discounts to readers 
of Success as a Real Estate Agent For Dummies that they don't offer to 
agents in the public domain. 

Converting FSBO listings: The 
successful agent's approach 

Plan to take a patient approach to FSBOs. Realize that you can't do or say 
anything — short of offering to give your services away — that will rush the 
owners' decision to abandon the idea of selling their own home. Basically, 
you're playing a waiting game that you can't win in a hurry, but that you can 
quickly lose if you're pushy or confrontational. 

/3 v P art " : Prospecting for Buyers and Sellers 


Agents who are filled with hyperbole about themselves and their service, or 
who try to tell owners that FSBOs fail to sell themselves, use the wrong tactic. 
Owners don't want overly-confident agents making them feel like idiots for 
trying to sell on their own — even if they are! 

The best approach is to dial back your sales pitch and enhance your empha- 
sis on service. Focus on helping the owners in their effort. Always encourage 
them and wish them success, but don't give away all your valuable services 
without a signed contract. 

Organizing your plan of attack 

Confine your efforts to a concise geographic area that allows you to stop by 
the FSBOs and see the owners as regularly as once every two weeks. When it 
comes time for them to convert to an agent listing, they'll find it harder to 
reject you or choose not to interview you if they've met you and know you 

If you work a large geographic area and are unable to whittle it down to a 
more concise area, expect to encounter a great many FSBOs. The easiest way 
to organize the opportunities is to track each home by the owners' phone 
numbers. Owners will change their ads and their asking prices, but they'll 
rarely change their phone numbers, and so by filing each home under its 
phone number you'll eliminate the risk of duplications. 

I kept a lead sheet for each FSBO prospect and attached clippings of all ads 
the owner had run. Whenever possible, I called the sellers and talked with 
them about their ads, making suggestions about how they could improve 
effectiveness. Then I'd watch for revisions. When they implemented the 
changes I'd suggested, the update indicated that I had built a level of trust 
with the prospect and that the likelihood of an interview was beginning to 
skyrocket. As long as you keep them simple, you don't need to worry about 
making too many suggestions. Because the sellers are only accessing a very 
small percentage of the marketplace of buyers, the chance of them selling 
because of your guidance is small. However, you'll gain trust a lot faster 
through the appearance of helping them save the commission. 

Remember, all you're trying to do is gain a commitment that if and when the 
owners decide to turn the job of selling their home over to an agent they will 
interview you for the job. 

Targeting your prospects 

In targeting FSBOs for conversion, use the following selection criteria: 

Chapter 7: Winning Business from Expired and FSBO Listings / 3 7 


is* Clear motivation to sell 

*«" A short selling time frame 

v^ A specific place they need to be by a certain date 

*<* The capacity to sell at fair market value with a commission 

V A high-demand home in a high-demand neighborhood 

*«* Owners who don't have a best friend or relative that is a real estate 

You need to ask owners these questions to understand how they fit into your 
criteria. By asking, you then know which client to invest your time in. 

The best approach to target FSBOs for conversion is to create a Top 10, Top 
20, or even Top 30 list. If you try to work much beyond 30 FSBOs, excellent 
service becomes a very difficult proposition. If you pursue the best 30 FSBOs, 
knowing that 80 percent — or 24 of the 30 — are likely to list in the next 60 
days, then you have 24 solid prospects, or about 12 a month. 

If you provide solid advice, counsel, service, and care, you can get half of 
those 12 to interview with you. Depending on your skill in the interview, you 
could convert anywhere from two to five into listings each month. Think 
about it: A business source that generates five listings a month is a great 
source of business. And even if it delivers only two a month, that's still 24 list- 
ings a year. Not bad! 

Making the initial contact 

Making initial contact with owners of FSBO homes is the toughest step for 
most agents, so I recommend that you make calls as soon as you see a FSBO 
come onto the market. I've had coaching clients who would buy the Sunday 
paper on Saturday afternoon just to get the FSBO classifieds. By doing this, 
they could call owners of new listings to have a professional conversation 
before the onslaught of calls from other agents began to come through. 

By being the first to place a call over the weekend, before other agents made 
their calls on the next workday, my clients found owners more open to dia- 
logue. They also found it easier to distinguish themselves when they were the 
first to get through, rather than after 50 other agents had already done so. 

Another benefit to calling FSBO owners early on Saturday or Sunday is that 
you leave your afternoons free to drop in on some FSBO open houses. 
Meeting owners face to face in their own homes presents an effective way to 
establish contact. The owners are sure to be home, they're expecting visitors, 
and they're ready to make contact and discuss the sale of their home. 

f j2 P art " : Prospecting for Buyers and Sellers 


Putting the mail carrier to Work 

Due to the four-to-five week sales cycle involved in converting FSBOs to list- 
ings, you can use mailers more effectively with them than you can when deal- 
ing with expired listings. By mailing helpful items once or twice a week, you 
give yourself a reason to make follow-up phone calls on a regular basis. 

After every face-to-face or phone contact, follow up with a handwritten thank- 
you note. The owners are getting mail from many other real estate agents, so 
to avoid the round file (aka the trash can), personalize your notes with hand- 
written exterior addresses. 

Also, use your mailers to send useful information that the sellers may need. 
Too often, agents act like adversaries of FSBO sellers. Take a different and 
better approach by helping them out. Most have no idea what they really need 
to do to complete the sale. For example, if they receive helpful advice from 
you every five days, when it comes time to sign their home over to a listing 
agent they're more likely to think favorably of your interview invitation. 

To use mailers effectively follow the following suggestions: 

**" Send the owners a property disclosure form and information on disclo- 
sure laws, including how the law affects the value and sale of their home. 
Buyers can back out even at the last minute if the owners don't handle 
this detail properly. 

u* Send a sample purchase and sale contract and maybe a counter offer 
form, along with the explanation that nothing ever gets agreed upon in 
the first contract. 

u* Send owners of older homes a lead-based paint disclosure form to give 
to the buyer of the home, if appropriate. 

u* Ask your lender to prepare a financing sheet that the owners can give to 
the buyer. 

W Send numerous other items to service FSBO sellers and create a connec- 
tion, including: 

• Sample net revenue sheets 

• Sample walk-through inspection forms 

• Updated market analysis reports of comparable properties 

• Sample brochures or photos of the owners' home 

• Guest registers for use at showings 

• Lead tracking forms to log information on people who call about 
the home 

Chapter 7: Winning Business from Expired and FSBO Listings / jj 

I* Lists of homes that would meet the owners' needs if they're look- 
ing to purchase a new home in the area. 
• Free reports about selling their home. 

Free reports are an effective device because they enable owners to educate 
themselves and increase their likelihood of success while simultaneously 
positioning you as the expert. By sending these reports, you establish your- 
self as a strong resource to help them succeed. Then, when they don't suc- 
ceed, you'll be there to pick up the pieces and list and sell their home. 

As you prepare to send free reports, consider using titles such as: "Selling 
your home yourself for the highest possible price" or "The seven mistakes 
most FSBO homeowners make that cost them thousands in their sales price." 
For free downloadable samples of these types of reports, go to our Web site 

at www. realestatechampions . com. 


Dialing for dollars 

As you work your high-priority FSBO homeowners, make phone or in-person 
contact at least twice a week. Use these communications to see how sales 
activity has been, whether a weekend open house is scheduled, whether they 
received your latest mailing, and, most importantly, whether they got the 
home sold. 

A portion of FSBOs sell on their own, but a big difference lies between getting 
a home sold and getting it closed. The fact that the owners achieved a sale 
doesn't mean that they'll get their money. The quality of buyers that shop 
FSBOs is lower than that of those who shop homes listed in the MLS. For this 
reason, when FSBO sellers report that they've sold their home, keep follow- 
ing up. A large number of these sales fall apart before closing. When that hap- 
pens, sellers who thought they were on the downhill slope wave a white flag 
and call in a real estate agent. Make sure that you're still in touch when that 
moment of frustration arrives. 

Overcoming rejection and staging resilient 

FSBO sellers will reject you because they would prefer not to use your ser- 
vices. But if you maintain a steady, professional relationship, offering help and 
staying in contact for four to five weeks, you'll usually be able to win an inter- 
view. From there, if you have excellent presentation skills, a listing follows. 

Increase your odds of success by taking these two precautions: 

is* Limit the number of FSBOs you cultivate. Focus only on the best 

clients, as described in the section titled "Targeting your prospects" ear- 
lier in this chapter 

I ju Part II: Prospecting for Buyers and Sellers 

is* Avoid prospects with low motivation or unrealistically high price 
expectations. These sellers are usually the most toxic, and too often 
they'll try to take their frustrations out on you. 

When most salespeople quit 

The reason that agents who pursue expired list- 
ings and FSBOs are so effective in securing list- 
ings is because most agents either don't 
attempt to compete or, if they do, they compete 
on a haphazard basis, usually quitting long 
before the sale is made. 

If you're going to succeed in sales, you have to 
get used to hearing the word "no" more often 
than you hear the word "yes." 

If prospects always said yes, real estate agents 
wouldn't be salespeople. Instead they would be 
called ordertakers. They would just take some- 
one's order, confirm its accuracy, and fulfill it as 
if they're working the counter at the local 
McDonald's, with no selling involved. 

Beyond that, if prospects always said yes, our 
income or payment for services would plum- 
met. One of the reasons that real estate agents 
usually get paid so well is thatthey're compen- 
sated for dealing with prospect rejection and 
finding solutions when answers aren't readily 

Study after study has confirmed that most 
salespeople quit long before the sale occurs 
because they can't take the rejection. For 

C" 44 percent of salespeople quit trying the 
first time the prospect tells them no. In 
other words, at the first point of resistance. 

nearly half of all salespeople quit trying to 
win the sale and earn a commission. 

«" 22 percent of salespeople quit the second 
time the prospect says no. That means that 
two-thirds of salespeople eliminate their 
chance of a paycheck aftertwo small road- 

i^ 14 percent of salespeople quit after the 
prospect says no for the third time. 

\^ 12 percent of salespeople quitand go home 
after a fourth no. 

Imagine that! 92 percent of salespeople bailout 
after four attempts to get the sale. That means 
that only 8 percent of all salespeople continue 
after the fourth rejection. 

Here's the amazing number: The studies further 
prove that more than 60 percent of all sales are 
completed after the prospect has said no at 
least four times. Maybe the prospects said no 
due to the terms and condition, maybe they 
needed more information and clarification, 
maybe their schedules didn't allow for the pur- 
chase, or maybe the timing was just plain lousy. 
In any case, the end result is that 92 percent of 
salespeople were missing in action by the time 
the seller was ready to say yes. That means 
that8 percent of the salespeople control 60 per- 
cent of the business, simply because they're 
there to ask for the sale when the buyer is 

Chapter 7: Winning Business from Expired and FSBO Listings / jj 


Playing the game of lead follovO-up 

Working FSBOs fundamentally turns into a game of lead follow-up. You need 
to personally and regularly contact your FSBO leads to discover their motiva- 
tion and qualifications, book face-to-face meetings, disqualify prospects as 
necessary provide regular service and communication, and schedule presen- 
tation appointments. Then you need to repeat the service and communica- 
tion steps several times weekly until the listing is in hand. 

Comma face to face 

To make personal contact, begin by asking the FSBO seller if you can come by 
and see the home. You can ask them in a few different ways. You can explain 
that you want to stay informed of the regional housing inventory, you can say 
that you're working with buyers who may be interested, you can present 
yourself as a potential investor, or, when you can, you can use the reverse-no 
technique. The idea of this technique is to get your client to say "no," which 
you end up reversing into a "yes" for business. For example, you can ask your 
client the following: "Would you be offended if I came by to take a look at 
your home?" "No" is what she really wants to say, but instead, you end up 
reversing the "no" into a "yes." Following are sample scripts for each 

Script for keeping up with the inventory: 

Mr. Seller, your home is located in my core area of sales. Because it is, I 
would like to come by and preview your home. Would there be a time on 
or to do that this week? 

Script for working with the prospective buyer: 

Ms. Seller, I understand you are selling your home on your own. Let me ask 
you this: Are you cooperating with real estate agents? What I mean is, if a 
real estate agent brought you a qualified buyer at an agreeable price to you, 
would you be willing to pay a partial commission? 

We are working with a few buyers for your area that we have not been able 

to place yet. May I come by on or later this week to 

see your home? 

When you use the above approach, understand that you're not interested in 
reducing your commission. What you're really trying to do is achieve a face- 
to-face appointment to collect more information on their sellers' motivation 
in order to determine the probability of securing a listing in the future. 

1 jO P art " : Prospecting for Buyers and Sellers 

Script for a potential investor: 

Mr. Seller, your home is located in a solid area for real estate investment. I 
was wondering if I could come by to see your home as a principle for possi- 
ble purchase, to see if it is a property that would meet my investment needs. 
Would or be better for you? 

In using the above approach, realize that the key phrase is "investment 
needs." You'll rarely find a FSBO that meets your investment needs. My per- 
sonal investment need is a home that can be acquired at a 70 percent dis- 
count below fair market value, whereas most FSBOs are trying to sell their 
homes at 110 percent of fair market value. However, this technique will get 
you in the door to see the home and talk with them. 

Script for a reverse-no: 

Ms. Seller, would you be offended if I came by to take a quick look at your 

The reverse-no technique can be used with any script. It capitalizes on the 
normal reflexive human reaction of "no" in order to achieve a positive 
response. It opens the door and allows you to then set an appointment. 

FSBO Survey Script 

Hi, this is from . lam looking for the owner of the 

home for sale. 

Your home is in my core area. I am doing a quick survey of the FSBOs in 
this area. May I take a few minutes to ask you some questions? 

The ad in the paper said that you had bedrooms and bathrooms. 

u* Do you have a two-level or one-level home? 

v* Are all the bedrooms on the same floor? 

v* Are they good-sized rooms? 

u* How is the condition of the kitchen? 

v* Are the bathrooms in good condition? 

v* Can you describe your yard for me? 

u* Is there anything else you feel I should know? 

i^ It sounds like you have a great home; how long have you lived there? 

u* Why are you selling at this time? 

Chapter 7: Winning Business from Expired and FSBO Listings / 3 / 

)/* Where are you hoping to move to now? 

u* What is your time frame to get there? 

i/ How did you happen to select that area to move to? 

i/ How did you determine your initial asking price for the home? 

u* What techniques are you using for exposure and marketing of your 

u* Are you aware that over 86 percent of the buyers for properties begin 
on the Internet now? 

v* If there was a clear advantage for you in using me to market and 
expose your home, and it cost you very little, would you consider it? 

v* Let's simplify. Set a time to get together for fifteen to twenty minutes, 
so I can see your home and understand your objectives. I have time 
available , or would be better for you? 


Building relationships 

FSBO relationships are built over time. By introducing yourself to the owners 
the first weekend their FSBO is announced, before the masses start calling on 
Monday, you create a good connection. By sending them tools, educational 
materials, free reports, and forms, you become an ally. By taking a personal 
interest in them and their situation, you create a solid connection that, in 
many cases, pays off when the owners decide to go with an agent they know 
and trust — preferably you. 

Over the course of building a relationship with the owners, you'll be able to 
get them to understand that in every real estate transaction a commission is 
paid. In the end, FSBO sellers don't save the commission. Rather, they try to 
earn the commission by doing an agent's job. In doing so, they spend a great 
deal of their money and time to perform, as best they can, the duties of an 
agent. Those duties include exposing the home through marketing, present- 
ing the home to buyers, building a sense of buyer urgency in order to prompt 
an offer, scheduling home inspections, handling qualification checks with the 
lender, supervising repairs, and facilitating the closing. 

FSBO owners unwittingly let buyers basically steal the "saved" commission 
through under-priced offers. People don't shop FSBOs because it's the cool 
thing to do. They do so because they know they can secure a low price and a 
high initial equity position. 

By building a relationship over time, you'll demonstrate your value to the 
FSBO seller. Whether you're working with FSBOs or expired listings, your goal 
is simply to be one of the two, three, or four agents that the owner will inter- 
view when the time comes. You just want the opportunity to compete and 
make your presentation. 

I jO ' >art " : Prospecting for Buyers and Sellers 

Chapter 8 

A Time-Tested Prospecting Tool: 
Planning and Hosting a 
Successful Open House 

In This Chapter 

Understanding why and how to host an open house 
Using open houses to meet prospects 
Preparing for and managing an open house 


Ml you're one of the many real estate agents who think open houses are only 

«S good for selling the home being shown — or if you judge success by the 
number of sales you generate as a result of your open houses — expect this 
chapter to redirect your thinking. 

Well-documented research shows that fewer than 5 percent of all buyers pur- 
chased a home they visited during an open house. This finding proves the 
open house to be, at best, a pretty ineffective sales approach. 

Despite this research, open houses are an important tool in an agent's 
business arsenal for a very good reason: Open houses give you a setting to 
show your audience what a great agent you are, ultimately providing a terrific 
opportunity to generate prospects. And all savvy agents know that prospects 
are the lifeblood of real estate business success. 

Count on this chapter to help you plan, stage, and host open houses that gen- 
erate buyer prospects, listing prospects, and — if the stars align just right — 
perhaps a buyer for the home you're showing. 

I IXU Part II: Prospecting for Buyers and Sellers 

Why Host an Open House} 



Open houses aren't the best vehicles for selling homes. So why do real estate 
agents bother with them? For the following reason: Open houses are a great 
means for prospecting. 

An open house provides a real estate agent with a neighborhood store front 
from which to do business for a day. Each time you host an open house, you 
set up shop in a client home and open the doors to the opportunity to meet 
prospects, establish relationships, and expand your real estate clientele. 

If your real estate business could benefit from an influx of buyer or seller 
prospects, start staging more open houses. You can hardly find a more effec- 
tive way to generate leads face to face. And, as a bonus, occasionally your 
efforts will net a sale. Not a bad bonus for a solid prospecting tool. 

Think of the open house as the real estate agent's equivalent to the retailer's 
loss leader, which is something that creates the initial opening for a sale. In 
the same way that a grocery store manager offers milk at a discounted price 
to draw shoppers into the store, a real estate agent invests time and money 
in an open house to build traffic, attract prospects, hand out business cards, 
and cultivate sales of other products. 

When I was selling real estate, I wasn't a big fan of open houses. I wanted 
to keep Fridays, Saturdays, and Sundays free so that I could take a scenic 
three-hour drive and enjoy the weekend with my family at our vacation home. 
Obviously, I couldn't have it both ways, so I opted out of open houses. But that 
was then and this is now. A lot has happened to change the way real estate 
agents work. The impact of the Internet, the time-draining effects of dual-income 
families, and the record low number of homes for sale have combined to put a 
new emphasis on the importance of open houses and why you should host 
them. Open houses rarely lead directly to the sale of the house in question, 
but as the following sections explain, they present many other benefits. 

A chance to meet potential 
clients face to face 

The explosion of online real estate marketing and shopping has led to a 
dramatic drop in the number of phone-to-phone and face-to-face meetings 
between real estate agents and their prospects. The open house provides a 
proven way to gain clear and easy real-time access to prospects that are 
ready to buy or sell homes. 

Chapter 8: A Time-Tested Prospecting Tool / [1 / 

So, what's in it for the sellers? 

You're probably asking yourself, "But what's in 
this open house thing for the seller?" Why 
would homeowners agree to be booted out of 
their houses for the afternoon so that their 
agents can throw open the doors in an effortto 
attract prospective new clients? And why do 
sellers care if their agents generate new leads, 

While you may have these questions, sel 
rarely, if ever, ask them. 


That's because most sellers have no idea of the 
limited results that are likely to result from an 
agent holding an open house in their home. In 
fact, if you survey most sellers, you find that 
they desperately want their agent to hold an 
open house for their home. They hold fast to the 
belief that an open house may sell their home. 
However, the odds are low: Homes are sold 
directly through open houses only one out of 
every twenty times. And it seems that every 
seller knows someone whose home was one of 
those few open house sales success stories. 
They inaccurately apply one owner's experi- 
ence as the rule instead of the exception. As a 
result, they want an open house, ASAP. 

To sellers, an open house is a tangible way to 
see agents doing something to earn their fees. 

The selling of real property is a mystery to most 
people, but they can easily understand an open 
house because it isn't part of the behind-the- 
scenes magic that an agent performs to getthe 
home sold. 

Sellers actually see some real advantages from 
the open house experience. Open houses do 
sell homes — just not the featured home and 
not usually to a prospect who attended the 
open house. For example: 

u* An open house attendee may share her 
home-buying interests with the hosting 
agent, who proceeds to sell her a home 
featured at an open house a week ago. 

j"* A couple attending an open house mayfind 
that the featured home isn't right for them 
but that it matches the wish list of some 
good friends, who end up making a pur- 
chase offer. 

What's more, an open house prompts the 
owners to get their home ready for prime-time 
showing, and that alone makes it worthwhile 
for all parties involved. Whetherthe home sells 
as a result of the open house (as only a few do) 
or afterwards, the effort provides a worthwhile 
dry run for all the showings that'll follow. 

In addition to giving you the opportunity of meeting all the home shoppers 
who drop in, an open house gives you the opportunity to meet neighbors and 
friends of the home's owners — all of whom may end up in the real estate 
buyer or seller market in the future. Take time to figure out the needs, wants, 
time frames, and motivations behind each person's home-shopping experi- 
ence. Form a connection with the home shoppers. Once they meet and visit 
with you, home shoppers find rejecting you as "just a salesperson" much 
more difficult. 

f u2 P art " : Prospecting for Buyers and Sellers 

A Way to meet the needs 
of dual-income families 

The ever-growing number of dual-income families has put leisure time at an 
absolute premium. Getting a prospect from this category into your office is a 
feat. However, motivated buyers frequently attend open houses on their own, 
as couples, or as families. When they do, you have the advantage of watching 
them react to a home. You can discover a lot by observing them in the house, 
noting the features that interest them, overhearing their concerns, and visu- 
ally tracking their reactions. You also have the chance to visit with them, 
which is the beginning of turning a casual open house visit into a lasting 
business relationship. 

A means of catering to the do-it- 
yourselfer's home-buying needs 

Over recent years, much of the U.S. has experienced a record low inventory 
of homes for sale. As a result, consumers are programmed to believe that 
finding a good home for sale is a tough task and that when a good home 
comes on the market it won't last long. 

For that reason, more and more prospects have taken home searches into 
their own hands in the following ways: 

w* They actively search out listings online. 

*<* They aggressively shop the swelled ranks of homes for sale by owner, 
which are also known as FSBOs. 

«-** They spend their weekends doing home shopping "leg work." 

*<* They attend open houses in droves. 

When do-it-yourself home shoppers drop into your open house, you're safe 
to bet on two things: 

v* They're serious about finding a home for sale. 
*<* They aren't represented by agents. 

In other words, they're great buyer prospects. 

Chapter 8: A Time-Tested Prospecting Tool / uj 

How many open houses should I host? 

Real estate agents always seek a magic for- 
mula that defines how many open houses to 
host and when to hostthem. I hate to disappoint 
you, but I haven'tfound a pat answer. However, 
here are a few good guidelines to follow: 

c" If you're a new agent trying to build a clien- 
tele and get your business off the ground, 
host open houses weekly, or at least regu- 
larly and frequently. Volunteer to hold open 
houses for the listings of other agents in 
your company. 

v If you're an established agent working to 
increase your business and win market 
share (see Chapter 14 for more on the topic 
of market share), add up how many open 
houses you've hosted over recent months 
and aim to increase thatfigure at least pro- 
portionately to the amount you're working 
to increase your business. 

i* If open houses are fundamental to your 
lead-generation strategy, you should hold 
an event at least several times each month. 



A high-touch opportunity 
in a high-tech World 

One of the big challenges facing real estate agents in today's wired world is 
learning the identities of their prospective clients. Home shoppers cruise and 
click their way around hundreds of real estate Web sites, requesting informa- 
tion via e-mail from scores of agents without ever revealing more than an 
e-mail address. 

As an agent, you can respond with an e-mail that provides the requested 
information, but it hardly allows you the chance to provide your professional 
counsel and to establish a professional relationship. 

For one thing, it's almost impossible to distinguish yourself from other agents 
via e-mail. Also, while e-mail allows you to communicate promptly, it doesn't 
allow you to easily determine the desire, need, ability, and buying authority 
of the prospect. Communicating over e-mail also stops you from determining 
the prospect's motivation and time frame and from customizing your advice 
to the prospect's unique situation. 

That's where open houses come to your rescue. Open houses cut through 
the electronic interface and put you right in front of prospective buyers 
and sellers — from there you can distinguish yourself, define your prospect's 
interests, and begin the professional relationship that leads to real estate 

[till Part II: Prospecting for Buyers and Sellers 

Setting and Achieving \lour 
Open House Objectives 


Regardless of the nature of your business or the frequency of your open 
houses, don't proceed with another open house before establishing your 
objectives and expectations for each open house event. 

The main purpose of an open house is to attract solid buyer and seller 
prospects, so when setting your objectives for each open house, you need to 
shift your focus away from selling the featured home and toward acquiring 

Before each open house, set your prospecting objectives, including the 

*«" Number of visitors you hope to meet and greet. Your answer depends 
on the size of your market area and the appeal of the home. Once you 
establish an objective for the number of visitors you expect to host, set 
the percentage of guests you intend to personally meet. The closer that 
percentage is to 100, the more effective you'll be in using the open house 
as a prospecting tool. 

*«" Number of contacts from whom you hope to collect information for 

use in future mailings and other forms of follow up. Not everyone is will- 
ing to share personal contact information, but with skill and effort you 
can expect to gather lead information from at least 50 percent of guests. 
For success, follow these tips: 

• Have a sign-in sheet and tell guests that you've been asked by the 
seller to track the attendees from the open house, and ask if they 
would they please help you keep that commitment to the seller. 
Don't pounce on them when they enter the door. Instead, wait 
until they settle in for a moment. 

At the bottom of the sign-in sheet, be sure to state that by signing 
in on this sheet they're agreeing to allow you to contact them in 
the future with real estate information. This helps you stay legal 
with the "no-call" laws that are in effect. 

• Have your business card ready to hand to people that walk in. As 
you hand it to them, ask for theirs at the same time. Often without 
thinking they'll dig into their purse or wallet and automatically 
hand you their contact information. 

u* Number of buyer interviews you hope to schedule. Again, no single magic 
figure exists, but my recommendation is that you aim to achieve interviews 

Chapter 8: A Time-Tested Prospecting Tool / [1J 

from at least 25 percent of the guests who provide you with follow-up con- 
tact information. To achieve interviews, consider these steps: 

• Ask for the opportunity to meet. You could use a script like this: 

"Bob and Mary, in order for you to maximize you initial equity posi- 
tion and minimize your upfront costs in securing a new home for 

your family, we simply need to meet. Would or 

be better for you this week?" 

• Most people at open houses also are sellers. They need to sell their 
current homes in order to make a new home purchase possible. 
Ask to come by and take a look at their home. Use script such as: 

"Bob and Mary, would you be offended if I came by to take a look 

at your home? Would or be better for you this 


• If you can't secure a face to face appointment, aim to at least set a 
specific time that you can contact attendees by phone. Then you 
can work to at least acquire an over-the-phone appointment for a 
specific day and specific time to speak next. Simply agreeing to call 
them later in the week is not good enough. 

Refer to the upcoming section titled "Being the Host with the Most: Effectively 
Managing the Open House" for help planning the strategy to follow to achieve 
your attendance, lead-generation, and prospecting objectives. 

Planning \lour Open Houses 
to Gain Maximum Exposure 


Open house success follows five clear rules in order to ensure the greatest 
return on your investment of time, money, and resources. If one of your current 
listings doesn't meet the following five criteria I wouldn't hold the home open: 

i^ Rule 1: Feature an attractive home in a high-demand area. 

v* Rule 2: Choose a home with great curb appeal. 

U* Rule 3: Market to the neighbors. 

v* Rule 4: Play the risk/reward odds by selecting a home in the upper- 
middle price range. (See the section titled "Don't skimp: Featuring a 
home in the upper-middle price range" for more details.) 

J-" Rule 5: Lead prospects to the home with easy-to-follow signage. 

1 11%} Part II: Prospecting for Buyers and Sellers 

The following sections provide advice on how to achieve each of these five 
success factors. 


Featuring a high-appeal home 

Here's a hard truth to swallow: No one comes to an open house to meet the 
agent. They come to see an appealing home, and your role as the hosting 
agent is to make that house shine. Your reward is the list of prospects you 
amass, and, one out of twenty times, a home sale to boot. 

As you prepare for an open house, think of the home you're featuring as the 
headliner of the show. Choose a home with star power by following these 

w Select a home in a high-demand, low-inventory area. Scarcity is a well- 
proven marketing strategy. People line up to get into crowded restaurants. 
They respond enthusiastically when told they're limited to "one per cus- 
tomer." And they'll show up at your open house in flocks if the home you're 
showing is one of only a few for sale in a well-regarded neighborhood. 

u* Do your homework before making your selection final. Study the 
inventory levels in the neighborhood you're considering for your open 
house. Obtain the prices of recent sales to be sure that your home is 
within the acceptable range. Research the number of days that recent 
sales and current listings have been on the market. Then compare your 
findings with research on nearby neighborhoods to be sure that the 
home you're considering competes well. 

The statistics you compile provide you with information you should be 
tracking anyway, so even if you rule out the home you're studying, the 
time you spend on the effort is worthwhile. 

Open house selection isn't a time for guesswork. Use your market knowledge 
to choose a home with high appeal and demand. Rely on gut instinct only 
when you're deciding between two homes with equal market appeal. 

Looking qood: Letleraaina 
the power of curb appeal 

All agents have seen it happen: A prospect pulls up alongside an open house, 
touches the brakes, takes a careful look, and then drives off without ever 
going inside. Nine times out of ten, the house lost the drive-by test. It lacked 
curb appeal. 

Chapter 8: A Time-Tested Prospecting Tool / £i / 

It's your job as an agent to counsel the home sellers to turn the house exte- 
rior into a perfect 10. 

In preparation for an open house, you at least want to work with the owners 
on the two areas that most significantly affect the home shopper's first 
impression: landscaping and paint color and quality. (For complete informa- 
tion on getting the house ready for showing, flip to Chapter 11.) 

Landscaping for fun and profit 

Typical landscaping reaches maturity after about six to eight years, and after 
that it needs to be thinned and reshaped. 

If the home you're showing is in a mature neighborhood and the landscaping 
is overgrown, convince the owner to enhance curb appeal by following these 

u* Spend a day trimming and removing overgrown and excessive plants. 

Hosting an open house in a home blocked from the street by a jungle is a 
formula for disappointment. Your drive-by prospect will see only 
untended bushes and trees — hardly a great first impression. 

*«* Plant or place seasonal flowers that add color, warmth, and an invit- 
ing first glance. A few hundred dollars of seasonal flowers can dramati- 
cally change the appearance of a "plain Jane" house. 

Choosing paint color that flatters 

Exterior paint color and condition is often the first thing that a prospective 
buyer notices about a home. To make the first impression a good one, urge 
the homeowner to consider this advice: 

V Installing shutters in a complimentary accent color can transform 
even the most boring '50s-style ranch house. 

w Adding an alternate type of siding in a small, strategic area in the front 
can improve the look of the home. By adding fish scale siding or a shake 
siding accent on a wood exterior face or over the garage gable, you can 
transform the home's first impression from ordinary to extraordinary. 

u* Painting the home in a widely acceptable color scheme helps it appeal 
to the greatest number of prospective buyers. Face it, while a few 
people may fall in love with a home painted robin's egg blue with pink 
trim, most buyers have a hard time imagining it in any other color, and 
so they drive right on past after the first glance. (Don't laugh. I once sold 
a home with exactly those paint colors.) 

/ [lQ Part II: Prospecting for Buyers and Sellers 

Inciting the neighbors 

Many agents achieve greater open house results from neighborhood market- 
ing efforts than from general public exposure. As you plan your open house 
announcement strategy, pay special attention to your nearest prospects by 
marketing to those who live right around the house you're showing. Follow 
these steps: 

i* Consider a neighborhood "sneak preview." Invite neighbors into the 
house an hour before the home opens to the general public. 

v* Send at least 25 invitations to generate an adequate neighborhood 
response. Better yet, hand-deliver 25 invitations. Before you allow 
yourself to assume that door-to-door delivery is too time-consuming, 
realize that this simple touch will increase your invitation response 
rate dramatically. 

U* Use neighborhood events to gain access to prospects in restricted- 
access neighborhoods. Restricted-access neighborhoods include gated 
communities or condo complexes that require the public — including 
real estate agents — to gain permission before entering. This entry bar- 
rier makes prospecting in these areas difficult at best. So whenever you 
achieve a listing in a restricted-access neighborhood, leverage the 
opportunity to stage an open house neighborhood preview that allows 
you to meet and establish relationships with surrounding homeowners. 

Don't skimp: Feature a home in 
the upper-middle price range 

Every marketplace can be broken down into the following real estate price 
categories: Lower-end, lower-middle, middle, upper-middle, and upper-end. 

Build your real estate practice around the upper-middle price point position 
to allow yourself the greatest sales flexibility and business success. The 
upper-middle price point provides the following: 

u* Risk-reward benefit. All prospects require similar amounts of time and 
energy, yet those that result in the sale or purchase of an upper-middle 
or upper-end property deliver far higher commission revenue. 

w* Positioning flexibility. By positioning yourself to serve the upper- 
middle price range, you won't get pigeonholed. You won't get painted as 

Chapter 8: A Time-Tested Prospecting Tool 1 Uy 

that snobby agent who sells only the upper-end and you won't get 
tagged as the agent who works only the low-end. You can easily move 
within all five price segments, migrating to wherever the market is most 
robust at the moment. 

v* Quality clientele. By specializing in upper-middle properties, you'll 
attract quality middle-range prospects who aspire to own more exclu- 
sive properties, even if they can't quite afford them. Plus you also 
attract buyers with the financial ability to migrate to the upper-end. 

*«* Quality lead generation. By working the upper-middle price bracket 
and by holding open houses that serve the upper-middle price category, 
you set yourself up to collect buyer and seller leads and grow your busi- 
ness within that lucrative price range. 


Showing the Way: Leading prospects 
to the open house 

Open house advertising is important, but it pales in comparison to the impor- 
tance of a well-selected open house site and a signage strategy that leads 
prospects to your open house front door. 

In choosing your open house site, make sure you do the following: 

If" Select a home near a well-traveled street to gain exposure from the 
traffic volume. 

Be careful that the home isn't too close to the traffic or you'll get traffic 
by the home but not to the home. Remember that buyers are reluctant to 
live too close to a thoroughfare or busy street. 

u* Hold your open house in a home that is no more than three direc- 
tional signs away from a well-traveled street. Otherwise you'll lose 
prospects as they try to navigate what feels like a maze. 

u* When running ads, announce the open house using on-the-hour start 
times. For instance, announce that the open house runs from noon to 3 
p.m. or from 1 p.m. to 4 p.m., rather than from 12:30 p.m. to 3:30 p.m. or 
from 1:30 p.m. to 4:30 p.m. 

On-the-hour start times help prospects remember the time of your open 
house, and it enables them to fit it into the schedule of open houses 
they're visiting in a single day. 

130 P art " : Prospecting for Buyers and Sellers 

Being the Hast With the Mast: Effectively 
Managing the Open Hawse 

A successful open house requires a well-chosen and presentable home, a well- 
organized host, and an impeccable follow-up plan so that no prospect gets lost 
in the post-event period. Use the following information to guide your planning. 

In addition, you may want to use the worksheet featured in Figure 8-1 to be 
sure you cover all the planning bases and arrive ready to open the doors to a 
successful event. 


Doing your homework before 
prospects arrive 

Before you swing open the doors to open house guests, be sure the home is 
clean, bright, and welcoming — and be sure that you're ready to present not 
only the home you're showing but other homes that may better fit the inter- 
ests of your prospects. 

Presenting the home you're featuring 

Arrive at the open house with flyers or feature sheets presenting the prop- 
erty you're showing. Bring enough copies to provide one to each visitor as a 
way of reminding the prospect of the home and, especially, of you. A few tips: 

v^ Keep the feature sheets simple. 

v* Include a picture of the home and information about bedrooms, bath- 
rooms, square footage, and amenities. 

*«* Include your picture and contact information. 

Research proves that most guests will not buy the home you're showing, but 
they may very well buy into the idea of working with you on their future 
home sale or purchase. The feature sheet will provide prospects with infor- 
mation on how to contact you. 

Discussing other available properties 

Before the open house, arm yourself with information on about half a dozen 
other homes that are similar in price, amenities, neighborhood status, and 
geography to the one you're showing. Then, when an open house guest indi- 
cates a lack of interest in the home you're showing, you're prepared to 
quickly and easily shift the discussion to another possibility. 

Chapter 8: A Time-Tested Prospecting Tool / J / 

Figure 8-1: 

Use this 




your open 




Planning Step 



Select the right property/Factors to Consider 

High-demand area 

Attractiveness of home 

Curb appeal 

Proximity to major street 
Set open house objectives 

Number of visitors 

Number of leads 

Number of buyer interviews 
Set the open house hours 
Plan neighborhood events, including: 

Sneak peak event 
Establish date/time 
Determine number of invitations 
Decide whetherto mail or hand deliver 

Other neighborhood events 
Plan directional sign strategy; choose sign locations 
Plan advertising and write ads 
Assess curb appeal; advise seller re: suggested improvements 


Place open house ads 

Prepare and produce flyers or home feature sheets 

Research up to six similar properties to share with prospects 

Advise seller of hour to depart prior to open house 


Prepare house by opening blinds, turning on lights, and arranging 

music, candles, etc. 
Place guest book or sign-in sheet and pen in entry area 
Put out flyers or home feature sheets 
Put out and carry a supply of business cards 


Send hand-written note to each attendee 

Send requested or promised material to prospects 

Make phone calls to set appointments 

j f}2 P art " : Prospecting for Buyers and Sellers 

The best research approach is to personally tour each home so that you fully 
understand and can quickly describe its attributes and how it differs from the 
home you're showing. Then, if a prospect expresses to you that the open 
house home wouldn't work because the back yard is too small, for example, 
you'll have first-hand knowledge with which to describe the large yard of 
another home you can recommend. 


Shooing the homeowners out the door 

Having the seller underfoot during an open house only causes barriers 
between you and the potential prospects. You must make arrangements for 
the seller to be away during open house hours and here's why: 

f" Without intending to do so, the owner may convey to the prospect a 
strong desire to move, causing the prospect to believe that the owner is 
anxious to sell, which may prompt a lower initial offer. 

v The seller may say something that raises a red flag about the condition 
of the property. 

*<* The seller may describe his or her favorite things about the house. If 
these features are ones the buyer dislikes and was thinking about chang- 
ing, the seller's input may simply shut down interest in the home. 

Most sellers want to help you sell their homes and, the truth is, the best help 
they can provide is being absent during the open house. 

Setting the mood With (ast-minute touches 

Right before opening the doors to your open house, take a few moments to 
enhance the warm, welcoming feeling attendees want to feel upon arrival. 

u* Throw open blinds to expose nice views. 

*«* Turn on lights to brighten corners. 

u* Burn candles and plug in air fresheners to scent air. 

u* Play soft music to fill the air. 

«-" Set out simple but tasteful refreshments to encourage attendees to 
linger. (For some thoughts regarding refreshments, see the sidebar titled 
"Gaining customers without home-baked cookies.") 

u* Place a guest book or sign-in sheet, along with a pen, in the entryway or 
at a point where guests gather. 

V Keep a stack of business cards and house flyers in a visible location. 

Chapter 8: A Time-Tested Prospecting Tool / j>3 

Gaining customers without home-baked cookies 

Certainly, one objective of an open house is to 
get the prospect to linger in the home. 

Obviously, the more time the prospect spends 
atyour event, the more time you have to estab- 
lish a relationship and communicate the value 
you can bring to that person's sale or purchase 
transaction. And a great way to get customers 
to stay a while is to serve refreshments. On that 
point, nearly all agents agree. 

The debate starts when the discussion turns to 
which kinds of refreshments are best. 

Some agents insist that the single best 
approach is to serve warm cookies straight 
from the open-house oven. The result is a two- 
for-one: Refreshments plus an aroma-filled 
home. I know of one husband and wife team 
that takes the idea even further, filling the house 

with the scent of a roast dinner, which they 
cook for their sellers while the open house is 
underway. As you might imagine, they generate 
a waiting list of people wanting them to hold 
open houses in their homes. 

I personally believe that all this kitchen activity 
advances the wrong message to prospects. 
They aren't looking for the next Emeril. They're 
looking for a sales professional to represent 
them in the largest single transaction of their 

My advice is to save the time you'd spend 
baking cookies and invest it instead into devel- 
opment of your sales skills. Find out how to con- 
vert an open house guest to a buyer or seller 
prospect by addressing that person's interests 
and needs, and you'll never need to don an 
oven mitt. 


Wallflower or social butterfly: Meeting 
and greeting during the open house 

Your primary objective during the open house is to meet guests and sell guests 
on meeting with you. Your measurement for success is how many appoint- 
ments you book for after-the-open-house buyer interviews, which are meetings 
during which you determine the prospect's motivation, time frame, wants, and 
needs, and the prospect learns how you work and what services you provide. 

Successful buyer interviews conclude with a prospect commitment, which takes 
the form of a signed buyer-agency agreement. This agreement is a contract to 
exclusively represent the buyer. At its core, the buyer-agency agreement is like 
a listing agreement where your compensation is guaranteed if the buyer buys. 
If the buyer buys any home (one that is listed and on the MLS or that is an FSBO) 
you'll be compensated for your time, effort, and energy The single best way to 
obtain a buyer interview is to convince the prospect when you're face to face at 
the open house that you're the best real estate resource based on: 

7 5*4 ^ art "' P ros P ect i n g f° r Buyers and Sellers 

is* Your superb knowledge of the marketplace 

i* Your high level of professional service 

*-" Your ability to deliver a buyer advantage in the marketplace 

t-" Your ability to facilitate the best lender arrangements and the smoothest 
closing transaction 

i* Your experience saving buyers' money in the short run via lower sales 
prices or initial down payments, or in the long run via reduced payments 

*<* Your commitment to delivering the quality representation that the 
prospect truly deserves 


Most agents who host open houses are too interested in obtaining contact 
information so they can initiate rounds of mailings and follow-up activity. 
Don't let your objective get off-track. Your aim is to get an appointment (not 
just contact info) so that you can make a personal presentation. 

The big difference between highly and marginally successful agents can be 
measured by the number of appointments they schedule and conduct daily, 
weekly, monthly, and annually. When you host an open house, keep your eye 
on the prize, which is the chance to sit down following the event in a quality 
one-to-one appointment with the most valuable asset your business can 
acquire: a quality prospect. 

As you work to develop prospects, consider these tips: 

t^ Invite attendees to sign the open house guest book or sign-in sheet. 

Many guests may be reluctant, at first, to provide you with the informa- 
tion you want and need — which includes their names, addresses, e-mail 
addresses, and work, home, and cell phone numbers. However, the 
longer you visit with the guests and the more they see that you can pro- 
vide them with valuable information, the more willing they are to pro- 
vide the information. 

*«* Present your business card to introduce yourself and create a profes- 
sional impression. Use the simple act of transferring your card to open 
the dialogue door with the prospect. Then, once you get a conversation 
going, begin getting the information that you can use as you convert the 
guest to a buyer or seller prospect. Use the following tips: 

• Ask the prospect a time-frame question. How long have you been 
looking? Have you seen anything you've liked? How soon are you 
hoping to be into a new home? The answers tell you not only about 
the prospect's time frame, but also about her motivation. If a 
couple says that they've been looking for six months, you know 

Chapter 8: A Time-Tested Prospecting Tool / f}y 

that they're not very motivated buyers or that they're slow to 
make a decision. Either one is not a good answer. 

Ask the prospect a dream question. What are you looking for in 
your new home over your present home? What features do you 
want in your new home? Describe your perfect new home for me. 
By getting the prospects to share what they want, you open up the 
dialogue. You also show that you care and are there to help them. 

Don't be a tree. In other words, don't be rooted in the kitchen or 
family room. Wander the house and stay close to the prospects 
without hovering around them. You have a secondary responsibil- 
ity to protect the home and the property of the seller. If the open 
house guests are in the master bedroom and you are in the 
kitchen, they could be in the jewelry box and you wouldn't even 
know it. Make sure that you're in the general area of your guests at 
all times. If the bedrooms are at one end, meander down the hall- 
way and ask a question, simultaneously checking on the where- 
abouts and interests of your guests. 

Ask the prospect to buy. Before open house guests leave, ask them 
to buy the home. If you've not yet secured their information, you 
have nothing to lose. If they're not interested, ask them what about 
the home causes them to feel it's not right for them. Doing so 
opens up the opportunity for you to share information on other 

Securing the deal by following 
up after the open house 

Promptly after the open house, send hand-written thank you notes to every 
single person who provided you with contact information. In today's world of 
e-mail and computer-generated correspondence, the power of a hand-written 
note is multiplied many times over. 

When following up, don't assume that your event was the only open house 
your prospect attended. I guarantee you that this isn't the case. Realize that 
you're in a competition with other agents, and one way to prevail is to prove 
that you're the one most skilled at lead follow up. Once your hand-written 
note is received by your prospects, take the following steps: 

**" If the prospect requested additional information, or you offered to 
provide specific information, send it promptly. But send it separately 
from and following your hand-written note. 

7 30 P art " : Prospecting for Buyers and Sellers 

Keeping low-cost contact with "iffy" prospects 

Sometimes you want to maintain relationships 
with moderately motivated prospects, in hopes 
that they choose to work with you when they're 
finally ready to buy or sell. 

A good, low-cost way to stay in touch with 
these contacts is to send an e-mail version of 
your real estate newsletter or some other form 
of cyber-correspondence that costs you noth- 
ing for delivery or printing. (See Chapter 6 for 

advice on creating and distributing your 

Don't expect a high percentage of these long- 
term prospects to convert into listings or sales 
based on this contact technique, but your cost 
is almost non-existent, so any success is nearly 
pure profit. However, be reasonable with your 
expectations. If you achieve a 3 percent return, 
consider yourself fortunate. 


W On the afternoon or evening of the day that your hand-written note is 
expected to arrive in the mail, place a phone call to the prospect. If 

the open house was on a Sunday, your hand-written note should be in 
the mail on Monday, and you should make your phone call the next day, 
usually on Tuesday The objective of the call is to book a buyer presenta- 
tion appointment in your office. If the note hasn't arrived when you call, 
don't sweat it. Proceed with your questioning and appointment-setting 
focus. Your note will arrive the next day to the surprise of the prospect. 

C" Later that same week, probably on Thursday or Friday, phone again. 

This time, tell the prospect that you've found a property that is similar 
to what he or she is looking for in a home. Explain that you would like to 
meet to evaluate its suitability. Aim to have the meeting take place in 
your office. Remember, you're in competition with other agents. 
Whoever gets the prospect into their office first dramatically improves 
the odds of acquiring a commission check. 

v* Repeat the previous step weekly for a few weeks. If you're unable to 
get the prospect into your office within a few weeks, the quality of the 
prospect is probably lower than first thought. It's probably time to cut 
loose and move on to more motivated buyers. 

When you prospect at open houses, among the leads you acquire are people 
who hope to move but never will. I call these hope-to prospects rather than 
have-to prospects, and it's your job as an agent to determine which prospects 
fall into which category. That way you can turn your time, attention, and 
talent to the needs of the more motivated prospect group. 

Chapter 9 

Presenting and Closing 
Listing Contracts 

In This Chapter 

Qualifying prospects based on their desire, need, and buying ability and authority 

Perfecting your presentation and delivery skills 

Addressing and overcoming objections 

Bringing presentations to a logical and successful close 

^^rospects are potential clients who are interested in considering the ser- 
V vice options you provide. That's the good news. The not-so-good news is 
that prospects seem to assume that all agents are cut from the same mold; that 
all agents do the same things in the same way. They're truly unaware of the dif- 
ferent skills, systems, and philosophies various agents bring to the job — and 
the huge difference in results they achieve. 

Too many consumers view agents with a commodity mindset. A commodity is 
an interchangeable, difficult-to-differentiate offering selected primarily based 
on price. Want an example? I was pushing a grocery cart through the produce 
section of the grocery store a few days ago, and I put one brand of bananas in 
my cart that were priced at 79 cents per pound. In the next aisle, I saw another 
brand of bananas for 39 cents a pound. Guess what happened? I took the 70- 
cents-per-pound bananas out and put the 39-cents-per-pound bananas into my 
cart. I'm not brand-sensitive when it comes to 40 cents a pound. That's a com- 
modity mindset! 

Too often, real estate agents are viewed as a bunch of bananas — in other 
words, with a commodity mindset. Most agent-listing presentations sound 
about the same, so it's no big surprise that prospects select their agent based 
on highest listing price and lowest commission rate. This chapter helps you 
set yourself apart. It provides the steps to follow as you convey your differ- 
ences, distinctions, and competitive advantages in presentations that are 

/ Jq Part II: Prospecting for Buyers and Sellers 

planned, practiced, rehearsed, and perfected. No more winging it! You're 
about to move into the league of the best, most preferred real estate agents. 

Qualifoinq \lour Prospects 


The success of a listing presentation is largely determined by what you do 
before you even walk through the door. Many agents enter the meeting flying 
blind, ill-prepared, and oblivious to the needs, wants, desires, and expecta- 
tions of the prospect. 

Make this pledge to yourself right now: Before you enter another listing pre- 
sentation, qualify your prospects in advance. When scheduling your listing pre- 
sentation, ask questions that allow you to obtain important information 
about the customer's desires, time frame, and expectations. Without this 
information, you can't possibly serve the client well. 

Many salespeople, especially in real estate sales, think they'll offend the cus- 
tomer if they ask questions. Here's an analogy that should put your mind at 
ease: Imagine you're sick and you schedule a doctor's appointment. You 
arrive, the doctor enters the examining room, and you look up and say, 
"Guess what sickness I have today?" From across the room, the doctor is sup- 
posed assess your symptoms, diagnose your ailment, and prescribe a cure 
without checking your ears and throat, listening to your lungs and heart, and, 
most importantly, asking you questions about what's wrong and about how 
you feel. It sounds ridiculous, but it's what real estate agents do when they 
try to serve clients without first asking questions to qualify their wants, 
needs, and expectations. 

Without good client information, a listing presentation becomes just another 
explanation of your services and service delivery systems. But what if the 
prospect sitting in front of you wants to be served differently? Then what? 

The customer ultimately determines whether your service is excellent or 
poor. Since the customer rules on the quality of service received, the only 
way to start the service process is to find out what customers want, instead 
of trying to guess their desires and expectations. 

Why and how to qualify prospects 

You want to qualify prospects for two main reasons: 

Chapter 9: Presenting and Closing Listing Contracts t Ov 

When the philosophy gap can't be bridged 

Sometimes, a prospective client relationship 
just doesn't feel right. That doesn't mean the 
prospect is a bad client. It means the prospect 
is a bad client for you. The only way you'll know 
whether the client is good for you is to do your 
qualifying homework by having a listing 
appointment with the client. 

You should enterthe listing appointment with a 
clear understanding of your own service 
approach and philosophy and use that as the 
basis for determining whether the prospective 
client is a good match for your business. For 

i-" If your philosophies and attitudes mesh 
easily, proceed full steam ahead. 

If you uncover philosophical differences, 
work to iron them out by presenting the 
benefits of your approach and seeking 
agreement to proceed along the path you 
know will result in success. 

If you can't find common ground and the 
relationship doesn't feel right, walk away 
from the opportunity. I think you should 
walkaway from a bad client match atleast 
one time to see how it feels to take control 
of your life and career. Sadly, most agents 
are too scared to do this. Instead they plow 
ahead through a nightmarish situation with 
toxic clients. 

is* To safeguard your time. By qualifying prospects you assess their moti- 
vation, desire, need to take action, ability to act, and authority to make 
buying or selling decisions. You also assess the odds that the prospect 
will result in income-producing activity. The qualifying process increases 
your probability of sales success by determining which prospects are 
likely to result in commission revenue and which are likely to consume 
hours without results. 

i<* To determine their service expectations. What kind of service do they 
expect? What buying or selling approach do they follow? Is there a 
match between your philosophy and theirs? If there isn't, can you con- 
vince them through persuasion that your approach is better than their 
preconceived notion of what and how you should represent their inter- 
ests? If not, are you willing to turn down the business? The only way to 
address these issues is to figure out what your prospects are thinking 
before you make your presentation. 

Before you enter a listing presentation, diagnose the situation you're entering 
and the opportunity it presents by examining the prospect's answers to the 
qualifying questions. I recommend you ask the prospect the qualifying ques- 
tions over the phone when you're scheduling the presentation appointment. If 
you wait until you're face to face with the prospect, it's too late. By then you 
want to be offering a tailored presentation, not acquiring baseline information. 


Part II: Prospecting for Buyers and Sellers 


Focus your qualifying questions around the following four topics: 

*<* Motivation and time frame: Ask questions that allow you to gauge how 
excited the prospect is to buy or sell, and in what time frame they're 
hoping for. Sample questions include: 

• Where are you hoping to move? 

• How soon do you need to be there? 

• Tell me about your ideal time frame. When do you want this move 
to happen? 

• Is there anything that would cause you not to make this move? 

is* Experience: A prospect's view of the real estate profession is filtered 
through personal previous experience and experiences related by 
friends and family members. The following questions help you under- 
stand your prospect's real estate background and preconceptions: 

• How many properties have you sold in the past? 

• When was your last sales experience? 

• What was your experience like with that sale? 

• How did you select the agent you worked with? 

• What did you like best and least about what that agent did? 

u* Pricing: Asking questions about money will help you gauge the 
prospect's motivation. They'll also help you determine whether the 
prospect is realistic about current real estate values and whether he is 
ready to sell or is just fishing for a price. Listen carefully to the answers 
to the following two questions: 

• How much do you want to list your home for tonight? 

• If a buyer came in today, what would you consider to be an accept- 
able offer for your home? 

Here's an old real estate sales truth: The higher the list price, the lower 
the motivation; the lower the list price, the higher the motivation. 

*-" Service expectations: Learning your prospect's service expectations is 
absolutely essential to establishing a good working relationship, but I'll 
warn you that when you begin to ask the service-related questions you'll 
likely hear dead silence. Your prospect has probably never met a service 
provider concerned enough to ask what the customer wants, values, and 
expects. As a result, you may have to probe and ask follow-up questions 

Chapter 9: Presenting and Closing Listing Contracts 


to help the prospect open up and enter into the conversation. The 
following are some sample questions to help figure out what you're 
prospect is looking for: 

• What do you expect from the real estate agent you choose to 
work with? 

• What are the top three things you're looking for from an agent? 

• What would it take for you to be confident that my service will 
meet your requirements? 

Following your phone interview or listings appointment, use the answers to 
questions in each of the above four categories as you compile a qualifying 
questionnaire on the prospect. See Figure 9-1 for a good format to follow. 

Checking your prospect's "bNA" 

Based on your qualifying efforts, determine the likelihood that your prospect 
will convert into a good client for your business by conducting a "DNA" 
analysis. This involves measuring the prospect's level of desire, need to take 
action, and ability and authority to make a purchase or selling decision. 


for desire 

Desire, or motivation, is the strongest indicator of a successful business 
outcome. A prospect's burning desire can overcome all other deficiencies, 
including a lack of financial capacity or purchase ability. 

Desire is not the same as interest. Anyone can have interest. Interest doesn't 
reflect intent, and it doesn't indicate a high probability of action. If a prospect 
simply says, "I have an interest in selling," probe deeper to see if the prospect 
actually has a real desire to sell, or is just interested in possibly selling. I've 
found that many "interested" shoppers are looking for something that doesn't 
exist. I've heard interested prospects basically say, "If you can get me $50,000 
above market value for my house and you can find one I can buy at $75,000 
below market value, I'll list my home with you." Get real! The truth is, if I 
could find a property for $75,000 below market I wouldn't sell it to him; I'd 
buy it myself and so should you! 

N for need 

A need is a specific and identifiable problem that your service can help a 
prospect fulfill. 

102 P art " : Prospecting for Buyers and Sellers 

Figure 9-1: 

Complete a 
naire as you 
prepare for 
each listing 


1 . How is the prospect going to make the decision? 

2. When is the customer going to make the decision? 

3. Does the prospect have the financial capacity to move forward? 

4. What, specifically, does the prospect want to achieve? 

5. What, specifically, does the prospect need from you? 

6. How do you assess the prospect's ability to move forward with a decision? 

7. Does the prospect have enough motivation or desire to complete a sale or purchase? 

8. How will the prospect judge your performance? 

9. Who else is the prospect considering? 

10. Who else will influence the prospect's decision? 


Chapter 9: Presenting and Closing Listing Contracts / (}j 

The power of desire 

The summer before my junior year in college I 
painted houses to earn money for my tuition, 
books, and room and board. When I started 
work on the last house of the summer, I learned 
that the owner was selling a 1976 BMW 2002. 1 
wanted that car, even though buying it would 
take all my summer earnings and college sav- 
ings. My parents tried to counsel me away from 
this foolish idea. My ability to buy was limited 

due to money, but my desire was greater than 
my lack of ability. I ended up borrowing the 
money for the car and still covering my college 
costs. This creative ingenuity didn't please my 
parents at all. Looking back, itwasn'tone of the 
smarter decisions I have made in the last 25 
years. But it did teach me a lesson about the 
power of desire or motivation to compensate for 
all other shortcomings. 


Many prospect's needs stem from lifestyle changes that prompt environmen- 
tal changes. A family expecting another child needs a larger home. Empty 
nesters tired of yardwork and home upkeep want to move to a maintenance- 
free condo. A divorce requires one household to become two households, 
sometimes forcing a home sale and several purchases in the aftermath. The 
need to buy or sell based on environmental changes such as these prompt 
the majority of real estate transactions each year. 

One of the reasons I worked expired listings was because the owner's level of 
need was so apparent. After being stuck with an unsold home for months or 
even years, the seller's need to find an agent who could solve the problem 
was pretty clear. My job was merely to convince the seller that by working 
with me her problem would be solved and that I would deliver a different and 
positive outcome. 

A for ability and authority 

Clients need both ability and authority to conduct a real estate transaction. 

Ability relates to the financial capacity of your prospects. Do they have the 
financial stability to sell their current home and buy the one of their dreams? 
Do they have enough equity in their current home? If not, can they borrow a 
larger sum to buy the one they want, or do they have access to additional 
funds to achieve their goal? 

Authority means the prospect has the power to make the decision — the 
power to say yes or no to the deal. Ask if the prospect is working with the 
ultimate decision-maker or decision-makers, or if someone else is also 

7 \)IX P art II: Prospecting for Buyers and Sellers 

involved. Also find out if the prospects will decide autonomously or if they 
will they seek the guidance or advice of others as they make their decision. 

Agents make a huge mistake when they make listing presentations to a 
prospect whose spouse or significant other isn't in attendance. It doesn't 
matter whether both names are on the title. In our family, we own properties 
that show only my wife's name on the title, and others that show only mine. 
This is purely an estate-planning move on our part. If we decided to sell, I 
guarantee that our input would be equal in decisions about pricing and about 
who should represent our interest in the sale. 

Fundamentals for Presenting Listings 
to Qualified Prospects 

A quality listing presentation involves considerable planning, careful 
research and analysis (see Chapter 10 for details on performing a competitive 
market analysis), and highly developed presentation and sales skills. By 
taking these measures, you derive maximum impact from the little time you 
have to present yourself and your recommendations, close the deal, and 
obtain signatures on a listing agreement. 

This section guides you as you prepare a presentation that displays all of 
your sales skills and abilities and helps you win your prospects' confidence 
so that you can secure their listing. 



Know the purpose of yow presentation 

Be crystal-clear on this point: The objective of a listing presentation is to 
secure a signed listing agreement before the meeting ends. It's not to pave 
the way for a be-back listing, where you plan to return at a later date to handle 
paperwork and secure final prospect approval. Your purpose is to make your 
case, close the deal, and get ink on the paper right then and there while 
you're face to face with your prospects. If you don't, I guarantee that the 
odds of securing the listing start to swing away from you. 

If you let even a few days or weeks slip by, your prospects will have a difficult 
time separating your presentation from those of the other agents they met in 
the meantime. And the moment they lose sight of your distinguishing attrib- 
utes they'll revert to a commodity mindset, focusing on price and selecting an 
agent based on who offered the lowest commission or the highest list price. 

Chapter 9: Presenting and Closing Listing Contracts / %}j 

I've personally made more than a thousand listing presentations, and I've 
coached and listened to the presentations of hundreds of other agents. 
Because of these experiences, I'm totally convinced that a quality listing pre- 
sentation can, and must, result in a signed contract at the presentation. 

Here are two reasons you need to have the listing signed during the 

v The moment you leave the appointment, anything can happen. A 

buyer could appear out of nowhere, knocking on your prospect's door 
with a direct offer. An agent who interviewed your prospect a few days 
ago could be desperate enough to call with an offer to cut their fee by 
another percent. At church or at chamber of commerce or Rotary meet- 
ings your prospect could meet another agent. Or, after a few days or 
weeks she may begin to confuse you with a different agent whose pre- 
sentation she didn't like at all. The list of possible scenarios goes on and 
on. The only thing you know for sure is that if you don't get the signed 
listing at the appointment, you leave it up for grabs. 

i* You need to feel the win. The win in the listing game is when the con- 
tract is signed. Don't underestimate the power of that personal victory. 
Selling involves the risk of rejection. If it didn't involve risk, it would be 
called order taking and you wouldn't be paid so well because it would be 
so easy. A listing presentation gives you the chance to go for the win, per- 
fect your close, and attain the victory. Give yourself the satisfaction and 
adrenaline rush of walking out of the home with a signed contract. Your 
drive home will be the shortest ever known. However, if you don't get the 
contract signed, it will be the longest few minutes you've ever endured. 

Make your presentation 
useful and interesting 

Most agent presentations put sellers to sleep, mainly because most presenta- 
tions lack interest, usefulness, and structure. 

The presentation advice in the preceding section provides all you need to 
know to overcome the structure and usefulness issues. To increase the inter- 
est quotient, follow this advice: 

u* Share market knowledge. Become a student of the local marketplace 
and share meaningful statistics. Also, track trends in the national mar- 
ketplace, both to enlighten your prospects and to distinguish yourself as 
a well-read, well-connected, and well-informed agent. 

/ %}%} Part II: Prospecting for Buyers and Sellers 


v* Ask questions. Listen in on typical listing presentations, and you'll hear 
the agent talking 80 percent of the time, with the prospect hardly getting 
a word in edgewise. I guarantee you that the seller finds that monologue 

t-" Watch the clock. Don't let your presentation run too long and don't save 
the information the seller most wants to receive until the very end. If 
you put your price recommendation at the very end of a 90-minute pre- 
sentation during which you did 80 percent of the talking, well you can 
pretty well predict that your seller will be tuned out. 

What the prospect has to say is more important than what you have to 
say. Great salespeople do less than 25 percent of the talking. You already 
know all that you need to know about what you're thinking. You need to 
figure out what your prospects think, know, and desire so you can match 
your service to their wants and needs. 

Keep it short and sWeet 

Let's get right to the point: A 90-minute presentation is neither short nor sweet. 
What in the world an agent finds to talk about for 90 minutes I have no idea, but 
I do know for sure that sellers don't want to sit through a 90-minute appoint- 
ment, and they most certainly don't want to listen to an agent for that long. 

Within the first few minutes of the appointment, inform your sellers that your 
listing presentation will take no more than 45 minutes. Based on my own expe- 
rience, I can tell you that more than half of the sellers will thank you when you 
tell them that your presentation will be brief. Many times, I've had clients 
thank me again when I was walking out the door with their signed contract, 
and while they do, I share their appreciation that I wasn't there all night! 

An effective, brief presentation results from a proper structure and a clear 
presentation plan, and from knowing what to say and how to say it. 

Many agents translate the terms "structure" and "plan" to mean a canned 
presentation. They say, "I don't want to sound mechanical and scripted." 
However, people sound mechanical and scripted because of lack of practice, 
not because they have a pattern or process to follow. In fact, most people 
expect professional service providers to follow plans or patterns. For exam- 
ple, when I board a plane you can bet that I want the pilot to follow a canned 
preflight checklist, landing checklist, flight plan, and so on. I'm not working to 
"can" anyone, but the necessity to plan your presentation is essential. Every 
time you present, you need to have a framework that you're comfortable with 
and that allows you to deliver key facts, findings, and segments by using key 

Chapter 9: Presenting and Closing Listing Contracts / \) / 

phrases and dialogues. While I don't suggest canned presentations, I would 
rather an agent err on the side of canned than to just wing it. 

The upcoming section, "Giving a Quality Presentation: A Four-Phase Formula," 
provides the structure you should follow as you work to prepare a great pre- 
sentation. Additionally, follow this advice: 

v* Know your prospects. If you aren't completely clear on your prospects' 
interests and needs, flip back to the first pages of this chapter. One of 
the reasons I constructed the opening section on qualifying prospects so 
meticulously is because acquiring prospect knowledge is truly the key to 
a good presentation. You absolutely have to secure the right information 
before going into the appointment. 

*<* Set a goal to keep your presentation to 45 minutes or less. Look at 
every piece of sales material you plan to present and put it to the test: 
Does it demonstrate clear benefits to the seller? Does it truly need to 
be used? Will the seller understand it? Does it create differentiation 
between you and the other agents? As the saying goes, "When in doubt, 
leave it out." 

i* Limit the number of PowerPoint slides or color presentation binder 
pages that you use because they eat up your presentation time and 
your chance to talk directly with the sellers. Typically, each page in 
your presentation — whether it's on a computer screen or on paper — 
represents two minutes of presentation time between turning the pages, 
talking about them, emphasizing key points, and asking for questions to 
confirm your prospect's understanding. Do the math: 30 pages times two 
minutes a piece eats up an hour, putting you well over your time limit. 
And that's before you even get to the contract! 


focus on four keys to a great delivery 

One study after another has shown that your body language and tonality 
account for over 90 percent of your presentation's effectiveness. What you 
actually say accounts for less than 10 percent of the delivery. If you're scram- 
bling to find the right words, as most salespeople are, you're spending your 
energy in inverse proportion to what impacts your effectiveness. 

The solution is to plan what you're going to say beforehand, so that during 
the presentation you can focus on language, tonality, and the following four 
items, which help provide a great delivery. 


Part II: Prospecting for Buyers and Sellers 


Webster defines conviction as a fixed or firm belief. I'd add that nothing is 
more compelling than conviction because it shows your client the level of 
passion in your beliefs. 

Your belief that you can get the job done draws the client to you. Your belief 
in the value of his home or how his home should be sold earns his trust. Your 
firm belief about where the marketplace is headed, backed by statistics that 
prove your point, sells you and your recommendations. 

Before you go face to face with sellers, determine the three things that you 
want to express with absolute conviction. If your sellers share your views, 
(you'll know based on your prospect qualifying work) that's a bonus. If their 
views are the opposite of yours, be doubly persuasive and resolute so that 
you can convince them to adopt your point of your view and gain their signa- 
ture on the listing contract. 

-<$0T£ In my presentations, I expressed my conviction that sales skills were an 

essential skill that I had that most agents didn't. I also was passionate about 
my conviction that open houses didn't sell homes. I told my sellers that I 
wouldn't inconvenience them with open houses like most agents would. 
Finally, I told them that an agent with high sales numbers in units sold was a 
more skilled agent than one with a high sales volume because they had a 
higher average sales price. 


Enthusiasm sells in spades. People want to work with those who are enthusi- 
astic about their home and the market. If the market is tough, you have to be 
frank; you can't just hide market realities. But you can still be enthusiastic 
and show that you're excited about the opportunity to "beat the odds" of the 

Your listing presentation will be more interesting if you're enthusiastic about 
your career, your business, their home, and the sellers as people. Follow the 
old sales adage: "Enthusiasm is to selling as yeast is to bread. It makes the 
dough rise!" 


I believe that confidence was the secret edge in my early sales career. Even 
when I was new to the game, I was confident that I was the best agent for the 
seller. This confidence was the result of a deeply grooved expectation of vic- 
tory that came from my participation in athletics. 

Chapter 9: Presenting and Closing Listing Contracts I Oy 


Where have you experienced victories? Tap into those past experiences as 
you pump up your confidence in preparation for prospect presentations. 

If you lack confidence, determine what you need to do to establish belief in 
yourself and your ability to achieve success. What activities would help 
increase your confidence? What skills do you need to master to dramatically 
affect your confidence? What one thing, if you did it with excellence, would 
change your self-confidence? 

The great success motivator Napoleon Hill says, "What the mind can con- 
ceive and believe, it can achieve." I saw evidence of this truth a few years ago 
working with a great agent in North Carolina. She didn't have confidence in 
herself, nor did she think she was a great agent. Even when she closed 100 
units a year, she was still self-sabotaging her success. I asked her to write out 
her standard of a great agent. She did so with great and specific clarity. Six 
months later she had met the standard to a tee, but was still in self-sabotage 
mode. Fortunately, I'd saved her written document and presented it to her as 
proof of her success. Since that day, she has believed in herself and has never 
looked back. 


Agents don't want to come off as pushy or aggressive in their sales approach, 
and by mistake they shy away from assertiveness as well. 

A great salesperson is a person who convinces someone to do something 
that is beneficial to him or her or who convinces that person to do it faster. 
Going for the close is not pushy. It's assertive. As a real estate agent, your job 
is to persuade prospects that you have the best service, the best value, and 
the highest probability for their success and to convince them to sign up for 
the benefits you provide, now! 

One of the easiest ways to exert your assertiveness is to tell the prospect it's 
coming. Early in the presentation say something such as, "At the end of my 
presentation tonight, provided we're all in agreement, we'll finalize the paper- 
work so I can begin to work for you right away." This bit of foreshadowing 
may come in useful should you encounter resistance at the time of the close. 
If you do encounter resistance you can use one of these scripts: 

"This should be no surprise. I told you I would ask for your business. You 
want me to follow through on what I commit to you, don't you?" 

"I'm proving to you right now that I follow through, right?" 

"Listen, Mr. and Mrs. Seller, homes are sold, not bought. The reason conver- 
sion of leads is so low is because many agents lack assertiveness with the 
buyer. So my question is: Do you want an agent that you know for sure will 

/ /(/ Part II: Prospecting for Buyers and Sellers 

ask every buyer to buy or an agent you hope will do that? Which gives you 
more comfort?" 

Being assertive in selling, especially real estate selling, is a good thing. 

Stay in control 

Agents lose control of the listing presentation when they allow the seller's 
agenda to take over the discussion. I have listened to agents who have lost 
control to the seller in the first five minutes. The problem for most agents is 
that once they lose control they don't have the skill to wrestle it back. 

The seller's agenda is simple: He wants to know what his home is worth, what 
you do to sell it, and what you charge for your service. And for sure he wants 
to know what he'll put in his pockets when the deal is done. If you allow the 
seller to take control and force you to orient your presentation to the order 
of his interests, I guarantee you won't walk out with the listing. 

If you talk about the price of the home and your fee structure before you've 
built trust, credibility, and value for your service, you'll lose every time. Don't 
ever follow the seller's agenda! Flip to Chapter 15 for more information on 
how to build trust and keep clients for life. 

Setting the agenda early on 

The most powerful technique for an effective presentation is to have an 
actual order or agenda to follow. I would further suggest that you create it 
according to the presentation guidelines earlier in this chapter. After you 
determine your agenda, type it out so you can hand it to the seller, saying 
something like the following: 

"Ms. Seller, I have found this presentation order to be most effective for my 
clients like you. It allows me to present to you the important facts, market- 
place strategies, and benefits you receive as my clients. In addition, there 
will be plenty of time to answer all your questions so you are completely 
comfortable with your decision. Would it be all right with you if we follow 
this agenda for our meeting?" 

Keeping on track 

Your agenda might look like this: 

1. Review agenda for the meeting 

2. Visual inspection of the property 

Chapter 9: Presenting and Closing Listing Contracts / / / 

At this point, you simply need to ask the seller if they would show you 
around their home. They'll usually be delighted to show you all the 
nooks and crannies that the home has. Often along the way you'll find 
sellers who stop to tell you what they think are the selling features of 
their home. 

3. Discuss the client's goals, needs, and expectations of me 

4. Discuss my professional credentials 

5. Determine listing price 

6. Complete the paperwork so I can begin serving the client 

The last item needs to be on your agenda. It alerts the clients in advance of 
how you're going to close. In fact, etch all six items in stone — don't move or 
rearrange them. You have to build trust, credibility, and value in that order or 
you'll lose. 

When the seller brings up a point that would cause you to abandon your pre- 
sentation plan, pick up the agenda sheet and ask: 

"Would it be all right to discuss that when we get to this point in the 

Gitfinq a Quality Presentation: 
A Four-Phase Formula 

A quality presentation follows these four phases: You begin by building trust 
and then you move into a demonstration of the benefits and advantages that 
you bring to the prospects, present your pricing recommendation and ration- 
ale, and move to close the deal by presenting a listing agreement and getting 
the prospects to sign on the proverbial dotted line. 

The appointment itself takes under an hour. The preparation involves a good 
deal more. The upcoming sections guide you through the preparations that 
go into each segment of the presentation. 

Getting off to a good start 

Paving the way for a good listing presentation involves only three steps, but 
you can't afford to skip a single one: 

/ / 2 P art II: Prospecting for Buyers and Sellers 

1. Make sure all decision-makers are present. 

This first step is more like an overarching rule. If one of the decision- 
makers can't attend because an emergency arose, reschedule for 
another time. If a decision-maker is absent, you'll have to rely on the 
other party to relay your presentation, complete with paraphrasing, mis- 
interpretations, abbreviated points, and omissions. Not a good option 
for you. 

2. Based on your pre-appointment interview, enter the meeting with a 
presentation that incorporates your prospect's needs, desires, and 

3. Open the presentation by building trust with your prospects. 

Forget about finding common ground or seeking to establish rapport by 
talking about your common interest in fishing, hunting, water skiing, or 
horses. Prospects see right through this disingenuous effort to establish 
a pseudofriendship. They're looking for business associates. So, get to 
the point. 

To build trust, summarize what the prospects have told you about their 
values, their goals for this move, the motivations behind the move, and 
what they hope to accomplish. Refer them to your qualifying questions 
and reconfirm the answers they shared with you. Confirm that you've 
correctly understood their input, and communicate that what is impor- 
tant to them is also important to you. 

This introductory and trust-building segment at the beginning of your presen- 
tation should take 10 to 15 minutes, at the most. 

The success or failure of your presentation can usually be traced back to this 
initial segment. If prospects don't feel that you understand and relate to their 
needs, wants, and desires, they'll tune you out after just the first few minutes, 
which is long before you get to the part where you tell them how great you 
and your company are! 

Setting yourself apart from 
the real estate agent pack 

In this part of the presentation, you demonstrate the benefits and advantages 
prospects can count on when they sign with you. You demonstrate these ben- 
efits by doing the following: 

Chapter 9: Presenting and Closing Listing Contracts / (j 


«-" Selling benefits instead of features 

u* Proving your competitive edge 

U* Presenting the strongest statistics to your advantage 

This segment of your presentation should be no more than eight to twelve 
minutes of your presentation. If it takes longer than that, you're talking too 
much about you and your services. The client will get bored before you begin 
the value discussion. 

Most agents make a big mistake by either omitting this segment or using it to 
present features of their business rather than benefits derived by clients. 
Many agents don't realize the difference between features and benefits. 
Examples of features are air conditioning in a home or anti-lock brakes on a 
car. The benefits of air conditioning include comfort, coolness, and ease of 
sleep at night. The benefits of anti-lock brakes are safety, protection, and 
quicker stopping. 

Sett benefits, not features 

The vast majority of salespeople, especially real estate agents, sell features 
instead of benefits. Look at image ads for agents or listen to listing presenta- 
tions and all you'll see and hear are features: 

*«* I sold 150 homes last year. 

*«* I've been in the business for 20 years. 

v* I work for the #1 company in the marketplace. 

i* I'm a member of the million-dollar club. 

*<* I put my clients first. 

i* I'm honest and have integrity. 

^ Blah, blah, blah! 

In these kinds of feature lineups, prospects don't hear anything about what's in 
it for them — they don't hear what advantages they reap as a result of the 
agent's attributes. As a result, they tune out much of the presentation, and the 
rest sounds just like what they heard from other agents. No wonder clients 
revert to the tendency of making decisions based on list price and commission. 

If you want prospects to listen and care, don't talk about yourself. Instead, 
talk about what you offer them. Turn every feature of your business into a 
benefit for the customer. For example, "I sold 150 homes last year" might 
become "I sold 150 homes last year and what really matters to you was that 

/ (11 Part II: Prospecting for Buyers and Sellers 

nearly 80 percent were on the market for far fewer days than the regional 
average. This reduction in time on the market reduced the number of home 
payments that my sellers made on homes they no longer wanted to own." See 
the difference? 

Prot/e your competitive edge 

Compare your performance against regional averages to prove your competi- 
tive edge. By citing industry averages, you clearly position yourself. You also 
give yourself the opportunity to demonstrate your superb market knowledge, 
which indirectly builds your reputation and directly benefits your clients. For 
help honing your market knowledge, go back to Chapter 4 where you find 
advice on collecting and analyzing regional facts and figures and presenting 
J0MJE* vour findings. 

As you prepare to present your distinct edge, ask yourself: 

u* What makes me different? 

u* Why should someone hire me? 

v* What are my strengths? 

*«* How do my distinct attributes result in unique client benefits? 

Also, take time to assess weaknesses in your service and then find ways to 
compensate for your shortcomings. For instance, if your stats are weak, pre- 
sent the benefits your client derives from your company's strong perfor- 
mance record. Or, if your time in the real estate field is short, present how the 
experience gained in your pre-real estate career benefits your clients. For an 
idea of how it works, look at these two examples of scripts that give you a 
positive spin: 

"One of your needs as a seller is an agent who understands how to create a 
successful transaction and satisfied client. While I don 't have ten years expe- 
rience in the real estate business, I am not new to our mutual goal — your 
satisfaction. One of the reasons I chose to work with real estate com- 
pany is because of their long and widely recognized success helping families 
like yours to achieve their goals and dreams. Our firm has led the region in 
successful transactions for XX years, and we bring that capability to your 
transaction. " 

"One of your needs as a seller is an agent who understands how to create a 
successful transaction and satisfied client. While I don 't have ten years expe- 
rience in the real estate business, I'm very accomplished at achieving our 

mutual goal — your satisfaction. In my previous career, I served over 

clients with a customer satisfaction rate of well over %." 

Chapter 9: Presenting and Closing Listing Contracts / ( j 

Use the pouter of your strongest statistics 

To set myself apart from other agents, during every presentation I always 
pulled out the power of my "Big 3" — the three key statistics that demon- 
strated my personal success and my company's success in the marketplace. 

Here's the approach I used: 

1. Start by acknowledging what the prospect already knows: Agents all 
provide similar service. I'd say: "Every agent will put your home into 
the MLS." (In today's environment, I might say, "All agents advertise 
homes on personal and company Web sites.") Then I'd add, "If those tac- 
tics were all it took to achieve success, then every agent would sell hun- 
dreds of homes. And, over 98 percent of listings would turn into closed 
deals, rather than the board average of 68 percent." With this introduc- 
tion, I basically admit that agents all do basically the same thing, yet 
they achieve vastly different results. 

2. Then set yourself apart. I'd say something like, "Do you want to hear 
what really creates the difference for my sellers compared to clients of 
other agents? It's the power of the Big 3: Sales skills, conversion ability, 
and conversion of leads to clients." Since my performance in those three 
areas was significantly better than the board's average, I knew I was cre- 
ating a sustainable, competitive advantage over the competition. 

3. Share a success story that shows the benefit your Big 3 advantages 
deliver. In my case, I'd share that the average agent converts fewer than 
2 percent of leads into clients. I'd then present the volume of leads my 
business and company generate and the corresponding conversion rates 
we achieve. However, I never quit at that point, since all it did was pre- 
sent a feature of our service. I had to show the prospects how this fea- 
ture benefits them. 

4. Show how your success story translates to client benefits. I'd show 
prospects how more leads results in greater exposure for each client's 
home. I'd explain that because my team and I converted leads at 16 per- 
cent, as opposed to the 2 percent average, my clients have a higher 
probability of selling their homes. I proved the point by showing that I 
sold 150 homes a year and that the average agent sold only four. These 
agents sell so few largely because the average agent develops far fewer 
clients to work with. While the average agent sells 9 percent of her own 
listings, our firm sold over 32 percent of our own listings. 

I would tell my clients that my track record resulted in higher probabil- 
ity of sale, higher sales prices, and less hassle for the seller working with 
me. To emphasize the point, I'd present this logic: 

7 / O P art " : Prospecting for Buyers and Sellers 

Increased clients = Increased showings 

Increased showings = Increased competition for the sellers' home 

Increased competition = Higher probability of sale or higher sale 
price, or both 

As a newer agent, you may not be able to show your own strong numbers, 
but you can present your company's Big 3 instead. For instance, you may 
focus on the fact that your company sells more units than its competitors, 
that your company has more agents to create more exposure, and that your 
company has high market share, which leads to increased ad and sales calls. 
Then present this logic: 

W Increased exposure for your client = Higher quality and increased 
number of leads 

«-" Increased number and quality of leads = Increased showings 

U* Increased showings = Higher probability of sale or higher sale price, or 

Gaining confirmation 

Once you've conveyed your benefits to the seller, pause to confirm that they 
understand and agree with the points you've made. Do this through a confir- 
mation close or trial close, using the following scripts as a guide: 

"Do you see how our company delivers the benefit of greater exposure and 
higher probability of sale for our clients? Is that what you want?" 

"Do you see why we have such a large market share, and does it make 
sense how our market dominance benefits you? Do you want that type of 
edge in the marketplace?" 


Presenting prices 

The moment you receive confirmation that the prospect understands the 
unique benefits you deliver, move into the pricing segment of your presentation, 
during which you share your findings regarding the value of their property. 

This part of the presentation should take only about 20 percent of the meet- 
ing time. You make your clear recommendation, present the strong, concise 
rationale behind it, and seek the prospect's agreement. Keep it short by fol- 
lowing this advice: 

Chapter 9: Presenting and Closing Listing Contracts / / / 

f" Keep it simple when telling the prospect the truth about the value of 
his home. 

I'm a firm advocate for giving the prospect a single price rather than pro- 
viding a range. If you're a little unsure, you can give him a range, but 
make sure it's a very tight range — less than a $50,000 variance. 

I suggest staying away from a range because invariably, if you use a 
range as many agents do, the seller will select the price in the highest 
part of the range, or even above it. When this happens, you risk having a 
property that is overpriced because you weren't strong enough to tell 
the seller the truth. You then have to invest the next few weeks, and in 
some cases months, getting the home down to a price that will allow it 
to sell. 

V After presenting your price recommendation and your case for its 
value, ask the prospect if he understands why his home is worth the 
amount you've recommended. Asking this question is the surest way to 
discover whether your prospects agree with your number. 

An alternate tactic is to prepare a full net-proceeds sheet, which shows 
the list price minus all closing costs. Walk him through each cost of clos- 
ing based on the price you suggest. Then when you get to the bottom 
line — the estimate of how many dollars will go into his pocket — ask, 
"Is this enough to get you where you want to go?" 

*<* Proceed to the close based on the answer you receive. Sometimes a 
prospect will agree with your recommendation, sometimes he won't, and 
sometimes he'll want to negotiate the number. 

If he agrees, the gate is open for you to go for the close and get his signa- 
ture on the listing agreement. 

If he says no or wants to negotiate, you have to find out how far apart 
you are. Ask him what he'll do if he can't get the extra money he's 
hoping for. Why does he feel your number falls short? Is his price goal 
based on the down payment requirement on the next home he's buying, 
or on his desire to obtain an 80 percent loan-to-value mortgage in order 
to avoid mortgage insurance? You can only work on solutions if you 
know your prospect's frame of reference, financial objectives, and the 
reasons behind his pricing needs. Keep in mind that what the seller 
needs or expects out of the sale has nothing to do with what the prop- 
erty is worth. 

If you don't gain agreement on price, you have nothing more to talk 
about during the listing appointment. There's no point in going further 
unless you can arrive at a meeting of minds on price. 

/ / q Part II: Prospecting for Buyers and Sellers 

Going for the close 

As soon as you have agreement on price, go for the close and get a signed 


You may be thinking, "When do I tell the seller about the marketing plan?" 
You don't. It's immaterial to the discussion. The listing presentation is about 
the results that you achieve, not how you achieve them. If your key statistics 
and the distinguishing benefits of doing business with you aren't strong 
enough, no marketing plan will fill the gap. 

Prove that you and your company are the best. Convince the seller of her 
home's value. Know her expectations of service and results and guarantee 
that you'll meet and exceed them. Then close the contract. 

Closing is the natural ending to a great presentation. 

Dealing With Sales Objections 


Sales objections are part of selling. For most people in sales, objections pre- 
sent an immovable object in the road to your success. Real estate agents 
often freeze when presented with a sales objection. They don't know what to 
do or say in the face of this perceived danger. 

Let me share with you a radical concept: Sales objections are actually good. 
Now that I've blown your circuits, let me explain. You won't sell anything sig- 
nificant without sales objections. Sales objections indicate an elevated level 
of interest, desire, or motivation to buy what you're offering. Objections are 
merely a request for more information. 

The prospect is saying, "I need more information. If I like the information you 
give me, I will do business with you." What could be better than that? 

Delaying objections 

One of the best ways to delay sales objections is to refer back to your 
approved agenda, saying: 

"Mr. and Mrs. Seller, would it be all right if I answered your concern when 
we get to item number 5 on our agenda? That's where we discuss . " 

Chapter 9: Presenting and Closing Listing Contracts / ( y 

More than 40 percent of the time, the seller won't bring the sales objection 
up again. You handled the sales objection by delaying its arrival. 

Using your agenda to delay objections is particularly important when the 
concern deals with the home price or the cost of your service. Don't ever 
respond to pricing concerns until you have determined the sellers' wants, 
needs, and expectations and have established the value for your service. 

Handling objections in four easy steps 

Objections are inevitable, and if you can't delay them, be ready to deal with 
them by following this four-step system. 


1. Pause 

When an objection arises, hear the client out completely and then pause. 
Pause to collect your thoughts and, for many salespeople, to lower what 
might feel like rising blood pressure. Pause to ensure that you heard the 
objection completely. Don't try to cut the person off. I've watched salespeo- 
ple interrupt, as if they're hoping to stuff the words back into the client's 
mouth before they're even out. This is the biggest mistake you can make. It 
demonstrates rudeness and insensitivity. 

2. Acknowledge concerns 

After hearing the objection and pausing to consider it, acknowledge the con- 
cern. This confirms that you understand what the client said, and it also 
gives you a few moments to consider and prepare your response. 

Nothing in the previous paragraph advises you to agree with the client. You 
can acknowledge the concern and thank the client for bringing it up without 
saying that it's correct. 

You can acknowledge the client by using any of these phrases: 

"I understand your concern in this area. " 

"That's a really terrific question. I'm glad you asked it. " 

"I can see where that might cause you concern. " 

One of my favorite techniques is to follow acknowledgement of a concern 
with a question or comment that probes for more information. The following 
responses give you an opportunity to find out more while also buying a few 
moments to develop a response: 

/ q (/ Part II: Prospecting for Buyers and Sellers 

"I understand your concern in this area. Why do you feel that way?" 
"I can see where that might cause you concern. Tell me more. " 

3. Isolate concerns 

By now you might be ready to pounce on the objection with your best 
answers. Hold off, if you can, while you isolate the concern. Isolation at its 
fundamental level, asks: "If it weren't for this concern, we would be working 
together, right?" 

By isolating the objection, you cause the prospects to lay all their concerns 
on the table. Through this one step you figure out everything that is standing 
between you and a signed listing contract. 

Use any of these isolation scripts as you help sellers get their concerns out 
into the open: 

"Is that the only concern that holds you back from moving forward with me?" 

"Suppose we could find a satisfactory solution to this important concern of 
yours. Would you give me the go-ahead?" 

"If this problem didn't exist, would you be ready to proceed right now?" 

By isolating the concern, you find out exactly what you're up against. You 
might surface another objection in the process — which is why many agents 
shrink away from this step — but you would have heard it later anyway. 

4. Respond With confidence 

By now you've heard the objection, paused, acknowledged, and isolated. Now 
is the time to respond. 

The most commonly stated objections center around agent commission, 
price of the home, length of the listing term, and the need for extra time to 
make the listing decision. More than 80 percent of the objections you'll hear 
over the course of your career stem from these key concerns, so prepare 
yourself by outlining and mastering your responses that convince the sellers 
you're able to handle the concern more effectively than other agents. 

Ask your broker for scripts that the company recommends you use to handle 
sales objections. If they don't have them, make an investment in your career 
and buy them from an expert. 

Chapter 9: Presenting and Closing Listing Contracts I O 1 

Asking (or the Order 


After you have overcome seller concerns or objections, ask for the order. In 
sales terms, this means ask the prospects to do business with you. 

At the end of a presentation, a typical salesperson's close is something like, 
"Well, what do you think?" It's obvious to me why the typical salesperson 
sells very little. Winding up with a question like, "What do you think?" is 
hardly asking for the order or closing. 

Closing is making a definitive statement about your conviction that you're the 
right person for the job and that the client should take action now. A good 
closing statement goes like this: 

"Mr. Seller, based on your goals, needs, and expectations, I'm confidant that 
I'm the right person to handle the sale for you. Let's get started now!" 

As you say, "Let's get started," you slide the listing agreement in front of 
them. Hand them the pen to sign with and smile. Most importantly, shut up! 
Don't utter a word. You want them to think and you want to let the moment of 
anticipation resonate. 

Bringing the Presentation 
to a Natural Conclusion 


Following any major sales transaction, people feel a bit of uncertainty, a feeling 
of, "What did I just do?" Preempt fear by addressing and controlling concerns. 

Before you leave the meeting, recap what steps will happen next and what 
you'll be doing for your clients in the next 24 to 48 hours. Then reassure them 
that they made a great decision. Tell them that you look forward to serving 
them and working with them, that the goals they set will be achieved, and 
that they selected the right agent for the job. 

If you don't get the contract signed at the appointment, it now comes down 
to follow-up after the presentation. Be sure to inquire about the time frame of 
their decision before you leave. 

/ q £ Part II: Prospecting for Buyers and Sellers 

Send a handwritten thank-you note the next day (at the very latest). Call 
them the day after your presentation and ask them if they need any additional 
information from you to help with the decision. Ask them if you're still in the 
running for their business. Is there anything that would swing the decision in 
your favor? The answer to this question may bring up your commission, but 
you should try to avoid that topic. If you can get a second appointment to 
meet face to face with them in the next 24 to 48 hours, you stand a better 
chance of securing the listing. 

Part III 

Developing a 

Winning Sales 


The 5 th Wave 

By Rich Tennant 


Sorry, Kr. and Krs. Vennex}. As your -real estate 

agent, I -wasn't prepared tor this kind 

o£ negotiation.'" 

In this part.. 

M^et you turned to this part first! In real estate, sales 
^^mean money. Commission checks follow closing 
papers, and closing papers result from a winning sales 
strategy, which is what this part is all about. 

In four jam-packed chapters, this part helps you establish 
a home's ideal sales price, get the house ready to show, 
market the property online and in print, show the prop- 
erty to prospective buyers, and close the deal with flaw- 
less presentation and negotiating skills. 

Financial success in real estate is the result of sales abil- 
ity. This part tells you exactly what you need to know. 

Chapter 10 

Determining a Home's 
Ideal List Price 

In This Chapter 

Breaking down property valuation 
Conducting and using a competitive market analysis 
Establishing and sticking to your own pricing philosophy 
Handling clients with pricing problems 

m Mne of your primary jobs as a real estate agent is to assess the value of 
^^ property for your clients. Arriving at an ideal price is hardly the result 
of guesswork. Skilled agents recommend purchase or sales prices only after a 
carefully considered review of the property's condition, location, structure, 
amenities, and functionality. This review is tempered by the realities of 
regional competition and the economic environment. 

The best agents follow a structured process as they evaluate properties and 
render pricing opinions, systematically balancing the features and benefits of 
the home against the attributes of competing homes, recently closed homes, 
homes that have been sold and are pending, and currently for sale homes. 

This chapter guides you through the field of real estate evaluation and helps 
you establish your own pricing approach and strategy. 

Examining Pricing Approaches 

The real estate world relies on three basic approaches to property valuation: 

V Appraisal: The vast majority of prospective property purchasers seek 
financing from a bank or financial institution. These financial entities 
require an appraisal in order to certify the value of the property and to 
ensure that the funds being lent cover a certain percentage of the real 
value of the property as assessed by an impartial third party (and not a 

7 O O P art '" : Developing a Winning Sales Strategy 

percentage of some pie-in-the-sky figure set by an aggressive seller or 
agent). An appraisal analyzes and documents the condition and attrib- 
utes of a property, and analyzes its value through a process that usually 
involves comparing the property with sales of comparable properties in 
the market area. 

Appraisers arrive at a home's value by issuing deductions and credits 
for features the home either has or doesn't have when compared to simi- 
lar properties in the market area. For example, if the subject home has a 
fireplace and comparable homes don't, the home's value is bumped up. 

Investigate the values an appraiser is likely to either credit or debit to a 
property in your area based on the amenities it has or doesn't have. Talk 
with appraisers in your area, and find out how they judge the worth of a 
fireplace, an extra bedroom, hardwood floors, an extra-large lot, an extra 
garage, upgraded finish work, landscaping, a sprinkler system, a deck, a 
hot tub, a spa bathtub, and other amenities or features. Because values 
vary greatly from one market area to another, compile a list of the items 
that affect pricing in your area along with the credits or debits that 
accompany each entry. This information arms you with your own valua- 
tion resource and allows you to offer valuable counsel to your buyers 
and sellers. 

u* Broker price opinion (BPO): A BPO is a property value assessment 

increasingly required by relocation companies that help employees trans- 
fer to new communities. Each relocation company has its own BPO form 
and process to complete, but nearly all aim to achieve the same objec- 
tive: to understand the value of the employee's currently owned prop- 
erty, the likely sales time frame, and the probability of a sale at a certain 
price. Based on the BPO, an employer can craft a moving package offer 
that's based on a sound value opinion. The last thing an employer wants 
is to offer a transferring employee an unreasonably optimistic buyout 
offer that leaves the company saddled with an overpriced home. 

u* Competitive market analysis (CMA): Competitive market analyses are 
fundamental to all professionally listed real estate deals. Agents skilled 
in conducting CMAs stand head-and-shoulders above their competitors, 
both in terms of client confidence and sales success. The next section, 
"The ABCs of CMAs," has the lowdown on CMAs, including what they are 
and the steps to follow as you perfect your CMA-performance skills. 

The ABCs of CMAs 

CMA is shorthand for competitive market analysis, a market review that stud- 
ies the prices of sold properties, pending sales, and active and expired list- 
ings to arrive at the current fair market value for a given property. 

Chapter 10: Determining a Home's Ideal List Price f Oi 


Most agents approach the CMA process with the mindset that the report's 
primary purpose is to educate sellers about the value of their property. I take 
an opposite view and suggest you do the same. 

I believe that the primary purpose of the CMA is to educate you, the agent, 
about the prices at which comparable homes are being listed and sold. Only 
by completing a competitive market review and analysis can you obtain cer- 
tainty and conviction about the value of the property you're getting ready to 
list. With this knowledge, you can proceed with confidence as you share your 
view of the marketplace and persuade the seller to accept your home pricing 

Did someone say "bubble' 

In terms of equity growth and sales volume, 
agents have just passed through the most pros- 
perous years in the history of real estate for 
North America. Recent years have logged 
record sales numbers, with each year topping 
the year before when it comes to number of 
units sold and gross sales revenue. 

Value appreciation in recent years reveals even 
more shattered records: Many North Ameri- 
can markets have seen property appreciation of 
more than 75 percent over the last four years. 
As a result, real estate owners have seen their 
wealth grow dramatically — at least on paper. 
Many have made more money than they ever 
imagined possible with no effort beyond simply 
holding on to properties purchased before 
prices started climbing skyward. 

In this environment, the following unrealistic 
expectations arise: 

w Many real estate owners expect prices 
to continue their current escalation 
with no end in sight. This view isn't just 
improbable — it's impossible. Real estate 
appreciation will grind to a halt, and the 
marketplace at large is already showing 
signs of a slowdown. 

V Many real estate owners unreasonably 
believe that the large, unearned equity 
homeowners enjoy (the difference 
between what they paid and what their 
property is currently worth) will always 
be there. This kind of thinking is fool hardy 
and economically dangerous. You don't 
have to subscribe to the bubble-busting 
theory to see that slower appreciation or 
even a slight value correction is certain to 
take place. 

Consumers and agents mustface and deal with 
the truth that home prices go through periods 
of robust appreciation followed by periods of 
marginal or minimal appreciation or even depre- 
ciation in value. 

Given the unrealistic views about value and 
appreciation, take extra care to clearly inform 
your clients that any current market analysis is 
valid for only a short and specific time period. 
As the marketplace changes, so will prices. By 
covering this point early in your pricing discus- 
sions you notonly educate your clients, but you 
also prepare sellers forthe possibility that they 
may need to consider price reductions in the 

/ QQ Part III: Developing a Winning Sales Strategy 


Staying current 

The key to the CMA, and in fact any valuation, is that it's current. Whether 
you analyze or interpret the value of a property using your own CMA, a 
broker price opinion, or a third-party appraisal, you're assessing the current 
value of the property. In other words, you're looking at what it's worth right 
now. Every time you use CMA results to counsel a seller or buyer on price, 
take pains to explain that the evaluation is based on today's market condi- 
tions and today's market timing and that many factors can influence the 
value assessment either positively or negatively in the future. 

Treat the CMA as a time-sensitive tool, and preface its results accordingly Too 
many consumers and even agents are misled into believing that a pricing value 
opinion reflects the least a property will ever be worth, totally ignoring the pos- 
sibility of market fluctuations that impact price regardless of the assessment 
approach used to arrive at the valuation. For example, if you render a value 
opinion and then the regional inventory of homes for sale explodes 30 days 
later, you need to sharpen your pencil and start a new CMA, pronto. If you wait, 
or if you stick to an outdated analysis, the increased inventory of homes for 
sale could dramatically affect your seller's ability to compete at the previously 
established price. 


Factors that contribute to a CMA 

A competitive market analysis involves a review of all homes similar to the 
one you're selling that have recently sold or that have sales pending, active 
listings, or recently expired listings in your marketplace. Activity in each of 
these four categories contributes to your analysis; however, some categories 
deserve greater importance or weight in your pricing assessment. 


Sold properties 

Often referred to as solds, sold properties provide the most valuable demon- 
stration of market value. They're properties for which sales goals have been 
accomplished, transactions have closed, and ownership has transferred. The 
sellers have their cash in hand, so you can be certain that the prices reflect 
values that won mutual consent from a willing buyer and a willing seller. Use 
these properties as the cornerstone of your presentation of value to the 
seller. Use entries from all other categories primarily to support the pricing 
position you recommend based on comparable sold properties. Solds also 
demonstrate the original list price and the number of days on the market, 
which shows you how competitive the home was in the marketplace. 

Especially in markets undergoing active appreciation or depreciation, review 
only homes that have sold and closed in the last six months or less. Sales 
before that period aren't likely to be an accurate indication of current values. 

Chapter 10: Determining a Home's Ideal List Price / Qy 

Pending properties 

Pending properties are homes that have been secured by a buyer, but the sale 
hasn't closed and ownership hasn't transferred. Deals linger in the pending 
stage for 30 to 60 days. When you study the pricing of comparable pending 
sales, realize that the information is less reliable than that of sold homes 

*<* Anything can still happen to derail the transaction. The buyer can walk 
away from the deal, or financing can be denied if either the owner or the 
house doesn't meet lending requirements. (For more on derailed trans- 
actions, turn to Chapter 13.) 

is* The price on a pending deal is the price the seller initially asked, not 
the final closing price. You won't know the final closing price agreed 
upon by the seller and buyer until the deal is completed. In some cases, 
the closing price is substantially less or more than the asking price. 

If a pending home is very comparable to the home you're selling and its pric- 
ing is very important to your CMA, contact the listing agent and ask if he or 
she can tell you whether the seller received close to the asking price. Expect 
only to receive general information; the agent can't give you the sales price 
due to fiduciary responsibility owed to the seller, but you're likely to receive 
enough information to help qualify the information received from pending 
sale documents. 


Active properties 

Your seller's eyes will wander straight to this part of the CMA because it usu- 
ally contains the highest prices in the report. Without good counsel, sellers 
look at the prices being asked for other homes and want to place their prices 
right at the top of the range. To avoid unrealistic expectations, take the fol- 
lowing actions: 

t-" Explain that active properties are accompanied by asking prices that 
will be affected by the outcome of buyer negotiations and final price 

u* Present comparable active listings as a good indication of the level and 
intensity of current competition for the buyer's dollars rather than as a 
clear indicator of current house value. 

u* Remind your seller that while she has only one house to sell, the buyer 
in a neutral market has many homes to choose from. Use active listings 
to help competitively position each house within the current available 

Expired listings 

Expired listings are homes owned by sellers who, in effect, lost the sales game. 
In a CMA, these listings provide a very good bookend against the prices of 

7 y P art '" : Developing a Winning Sales Strategy 

sold properties. Presenting both categories lets you show your seller the 
pricing path to success, as indicated by sold properties, and the path to fail- 
ure, as indicated by expired listings. 

For an especially instructive pricing example, find an expired listing that also 
shows up in your sold category of properties. Use the example as a graphic 
illustration of the first-time failure that can result from overpricing and the 
eventual success that results from on-target pricing. 

Creating a CMA 

Real estate agents approach the CMA process in a number of different ways, 
using various software tools and assembling findings in anything from plain 
reports to impressive presentations filled with photos and jazzy graphics. 
The real value of the CMA, however, isn't in the packaging (although a great- 
looking report is almost sure to help you communicate your findings more 

In my opinion, the real magic of the CMA process is that by gathering data 
and making comparisons, you develop your marketplace knowledge and your 
conviction and belief in your pricing recommendation. That knowledge and 
certainty translates to client confidence and wise decision-making. 

To prepare a CMA, you must first choose your CMA software tools and then 
perform a little research and data assembly. 

Choose your CMA software toots 

Most MLS (multiple listing service) systems offer CMA software and classes 
for agent use. I suggest you take advantage of any of courses that help you 
gain familiarity and skill with the programs. 

The software available through most MLS offices usually results in a basic 
CMA template. If your real estate company provides software that results in a 
fancier presentation, ask your broker or broker manager whether the com- 
pany offers training and, if so, take advantage of it. Also, consult with other 
agents about the software they use to produce their CMA reports. 

Develop your data-gathering system 

Whether you decide to use MLS-provided software, company-provided software, 
or some other software tool, the outcome of your CMA really depends on the 
data you put into it. Follow these steps to create an information-development 
system that you can use over and over again each time you analyze the market 
conditions for a new property: 

Chapter 10: Determining a Home's Ideal List Price f y I 

1. Search for recently sold properties that are similar to the one you're 
selling in terms of square footage, number of bedrooms and bath- 
rooms, and garage size. 

In real estate lingo, these homes are called comps, short for comparable 
properties. You don't have to find homes that identically match the 
offerings of the home you're pricing but rather homes falling within a 
reasonable range of the home in terms of square footage and number of 
rooms. When you have a number of comparable homes to review, you 
can tighten the range and reduce the number of comps that meet your 
predetermined criteria. You may even take into account the age of a 
property when selecting comparable homes. This is especially true with 
newer or much older or historic types of homes. 

When I was preparing CMAs and needed to pare down the number of 
properties under review and achieve an accurate CMA, I'd tighten the 
range requirement by adding search fields. For instance, I'd screen for 
comparable homes in a certain school district or even within the bound- 
aries of a specific grade school. In some areas of North America, being 
within the boundaries of a certain grade school or middle school can 
significantly influence the value of a property. 

If the home you're selling has a particularly distinctive attribute, such as 
a very large yard or even acreage, add that feature to your search crite- 
ria in order to find comparable properties for analysis. 

2. Narrow your review down to 10 to 15 comparable homes, and evalu- 
ate each property by comparing its features with those of the seller's 
property. Make a list of similarities and differences. 

3. Estimate the value of the seller's home by comparing its features to 
each comparable home under review, applying pricing credits or 
debits based on the differences you discover. 

For instance, if a comparable property has one more bathroom than the 
home you're selling but is otherwise comparable, debit the value of that 
bathroom from the comparable home's sale price to arrive at a likely 
value of the house you're selling. 

4. Repeat Steps 1 through 3 with comparable pending sales, active list- 
ings, and expired listings. 

Expired listings will likely comprise the smallest group of properties you 
review, but take special care to study each and every one. Check to see 
if the expired listing also appears on your list of recently sold, pending, 
or active listings. Frequently, you'll find that a listing that expired under 
one agent or at one price was later picked up, re-priced, and re-offered 
by another agent. The difference between the selling price at which it 
became an expired listing and the price it's currently listed at or at which 
it finally sold provides a very clear indication of the home's actual current 
market value. 

7 y £ P ar t '" : Developing a Winning Sales Strategy 


5. When you have a list of comparable homes from all four categories, 
select four to six of the best, most comparable ones from each cate- 
gory for study, evaluation, and inclusion in the CMA report you pre- 
sent to the seller. 

Your final selections should be very similar to the seller's property, with 
differences reflected by reasonable credits and debits. 

6. Print out a complete listing for each of the properties you've selected 
as comparable to your seller's home. 

You may not show each and every one to the seller, but you need to 
have them on-hand at the appointment in case you need further ammo 
to prove your point. 

From start to finish, expect the creation of a CMA to take you somewhere 
between a half hour and several hours, depending on your market area and 
the kind of property you're selling. 

For example, suppose you're listing a home in a production builder develop- 
ment in which hundreds or even thousands of homes all feature one of only 
six different floor plans. If your seller's home is the Magnolia plan, guess 
what? It's going to end up with a price comparable to the price of every other 
Magnolia home on the market or recently sold, regardless of differences in 
finish work, fixtures, carpet, tile, or landscaping. The Magnolia plan will only 
sell for so much — even if it has gold floors and gold toilets! 

In technical jargon, neighborhoods filled with similarly designed homes by 
the same builder are described as homogenous. If you're selling homogenous 
properties, you can conduct straightforward, easy-to-execute CMAs in almost 
no time at all. But when you're listing a unique property with no obvious 
equivalent in the marketplace, plan to invest several hours assembling a 
lengthy list of comparables and then conducting follow-up analyses to arrive 
at an accurate pricing recommendation. 

CMA mistakes to avoid 


Agents commonly make three major mistakes in the CMA preparation 
process: They work to establish a high sales price, they include too many 
comparable homes in their comparison, and they overemphasize the price 
per square foot. This section tells you how to avoid these traps. 


If you approach a CMA with the desire to establish the highest sales price for 
the seller, more often than not you end up with an overpriced listing. Remem- 
ber, the goal of a CMA is to determine a demonstrated indication of the true 
current value of the home. You're not developing an opinion of what a buyer 

Chapter 10: Determining a Home's Ideal List Price / yj 

may consider a reasonable value; you're working with facts to arrive at an 
objective, accurate valuation. 

Explain the purpose of the CMA to your seller and achieve a meeting of minds 
that you aren't working to justify the highest price but rather to reflect 
market conditions and arrive at an accurate value in order to present and sell 
the house in a timely manner. 

Presenting too many comps 

I've seen agent-produced CMAs that include 10 or 15 comparable homes in 
each category: sold, pending, active, and expired. Do the math — that adds 
up to at least 40 home prices to review, which is more than enough to con- 
fuse even the most analytical seller. 

Beyond confusion, when presented with too many comps, many sellers latch 
on to the most unreasonably priced homes in the review. Your seller may 
wonder why he shouldn't at least start at the price the people on Mulberry 
got, even though that price is $20,000 over current market value. 

To sidestep the pitfalls of too many comps, after you select four to six comps 
for each category, stop gathering information and begin assembling your 
CMA into final form. 

Putting too much emphasis on "price per square foot" findings 

When comparing prices, agents often calculate the price per square foot of 
comparable properties. They arrive at this figure by taking a sale or listing 
price and dividing it by the home's square footage. For instance, a 1,500 
square-foot home listed at $425,000 has a price per square foot of $283.33. 

I personally believe price per square foot has a limited effect on value. For one 
thing, it doesn't account for the quality of a home — the quality of the finish 
work, baseboards, casings, moldings, marble floors, granite countertops, ele- 
gant appliances, top-grade bathroom fixtures, and landscaping extras. It doesn't 
factor in such features as stone exteriors, paved patios, extra garages, or archi- 
tectural design features. Price per square foot treats each home like a box on a 
plain vanilla lot, ignoring anything that really makes a house a home. Yet agents 
and consumers use the calculation as if it were gospel — often using it to defend 
low offers — when in reality, a long list of other factors make the price per 
square foot calculation either meaningless or erroneous. 

Taking CMA results With a qxain of salt 

I suggest you make "Stop and smell the roses" your mantra during the CMA 
process. At some point during your review of real estate records, home 
photos, and computer analyses, take a break and get out to actually look 

7 y&i Part HI: Developing a Winning Sales Strategy 

at comparable properties in order to form a good old-fashioned first-hand 

Don't expect data sheets and digital photos alone to present the strengths, 
weaknesses, and permutations of each comparable property. Some homes 
just plain feel better than others, and that's a distinction you have to experi- 
ence live and in real time. Follow these suggestions: 

t-" To view an active property, make an appointment with the seller. 

v* For a pending property you can call the agent or the owner to gain entry 
in order to evaluate the house against your seller's home. 

*<* Call owners for permission to view homes that have recently sold or that 
have expired listings. You may even be able to turn a tour of an expired 
listing into a prospecting preview. Play your cards right and your 
research for one seller's CMA may secure another seller's listing. 

If you can't gain access to a home, at least take a few minutes to drive by any 
of the comparables you're studying. The drive gives you a chance to review 
the neighborhood as well as the exterior condition, landscaping, and curb 
appeal of each property. 

beiSetopinq \lour Pricing Philosophy 

Ask a dozen agents to explain their home pricing philosophies and you'll get 
a dozen different approaches. And if the talk reveals frank responses, you'll 
also discover that the most common pricing strategy is no strategy at all. 

Break out of the ranks by establishing and following a specific strategy for 
arriving at the ideal selling price for each home. The best strategy to adhere to 
is the one that says a properly priced home is practically sold. Adopt the phi- 
losophy that in real estate sales, price is king. Price trumps all other factors — 
including marketing approaches, home condition, market competitiveness, 
and sales approach. I believe that in the end, marketing and condition of the 
property are controlled by the price. 

The alternative strategy advocated by many agents, most sellers, and even 
some sales trainers, is to emphasize marketing over pricing. Instead of work- 
ing to set the ideal price, they believe success will come from optimizing the 
home's condition and presentation and then marketing it with skill and savvy. 

gOOJf Based on years of experience working with sellers who wanted unrealistic 

prices for their homes and therefore experienced first-time sales failures, I 
stick to the "price is king" approach. Over my sales career, I resurrected and 
re-listed more than 600 expired listings — nearly 75 a year. In all those trans- 
actions, I never met an owner with an expired listing who thought an unrea- 
sonable price had anything to do with home's failure to sell. They all blamed 

Chapter 10: Determining a Home's Ideal List Price / yj 


the previous agent and that person's approach to marketing. Each sought 
some magic marketing strategy to change the reality of the law of supply and 
demand. There is a magic strategy: Price the home correctly. 

Price is the only factor that can overcome sales obstacles, compensate for a 
home's deficiencies, and motivate a purchaser even if the condition of the 
property and your marketing approach are less than perfect. If you take and 
price a good listing competitively, it will sell. You can't keep a well-priced list- 
ing a secret! 



Avoiding overpricing just 
to please the buyer 

Hope isn't a successful pricing strategy, and the please-the-client mindset is a 
difficult one to abandon. Agents who achieve listings with unrealistic prices 
find it difficult to later counsel their clients honestly. 

Does this scenario sound familiar? An agent (usually a newer agent) is short 
on business or maybe even desperate for the chance to stake a sign in some- 
one's yard. The agent wants a listing at any price — even if the chance to seal 
a deal on the listing erodes the likelihood of actually selling the property. 
This is commonly referred to as buying the listing. To gain a seller's nod of 
approval, the agent makes a flatteringly high pricing recommendation, throw- 
ing out a number the client wants to hear, and then hopes something good 
will result from the bad situation. I can think of few examples, if any, in which 
this approach actually works. 

I have a friend with a home for sale where I live in Bend, Oregon. He selected 
an agent who clearly demonstrates the "get the listing at any price" mentality. 
The result: His home is for sale at a price at least $200,000 over market value. 
Every agent in town knows it's overpriced. The listing agent knows it, too, but 
he's more interested in the For Sale sign than the Sold sign. He's hoping some- 
thing good will come out of this poorly priced situation, but the only way the 
seller and listing agent can come out on top is to find a two-suitcase buyer — 
a buyer with one suitcase full of money and another suitcase full of stupidity! 

The pitfalls of a please-the-client approach are many and significant. By over- 
pricing, you can practically count on a reduction in your productivity, prof- 
itability, and salability (your sales and success track) because 

is* It's impossible to keep your productivity high when your time is spent 
in conversations with an unsuccessful seller who lacks motivation to 
take corrective action. The seller's negativity, concerns, and phone calls 
only increase with each week or month the house remains on the market. 
As time goes on, you devote more and more time unsuccessfully trying 
to create a sale, not only for your seller but also for yourself. This extra 
work pulls you away from activities that are more likely to deliver income, 

/ y O Part III: Developing a Winning Sales Strategy 

and the ensuing frustration strips your motivation and stunts your ability 
to secure better appointments that create other income opportunities. 

*«* An unsold, overpriced listing costs you time and money to service 
while it delivers no revenue to your business. The situation only gets 
worse the longer the listing languishes on the market. You'll end up 
deducting the expenses of this in-limbo listing from the proceeds gener- 
ated by any revenue-producing deals you manage to close in the mean- 
time, reducing your net profit and business success. 

V Unsold homes that linger on the market seriously diminish your sala- 
bility. Your salability is based on such key statistics as your average 
ratio of listing price compared to sale price and the average number of 
days your listings are on the market. Obviously, these statistics, which 
prospects rely on when choosing one agent over another, can be 
crushed if you want to get listings at any cost; they're also harmed by 
the tactic of starting high and reducing the price later, which I focus on 
in the next section. You can also develop the reputation of being an 
agent who only pounds For Sale signs into yards. People notice when 
you haven't posted any sold signs. 


Steering clear of starting 
high and reducing later 

No matter whether you're selling real estate or any other offering, pricing 
must reflect what the market will bear, not what the seller needs to net. Your 
pricing deliberation should focus only on the value as determined by your 
CMA (see "The ABCs of CMAs" earlier in this chapter). 

I can't count the number of times I've heard a seller start pricing discussions 
by saying, "I really need to net this amount of money." The declaration usu- 
ally goes hand-in-hand with the seller's instruction to "try this price, I don't 
want to give it away," which is usually followed by the caveat, "We can always 
come down but we can never go up." 

If you allow yourself to be swayed by a seller's need to start higher than the 
property should be priced, you set yourself up for a costly error. 

As an example of the situation you want to avoid, review the anecdote in the 
previous section about my friend's overpriced home. You can bet his agent 
didn't arrive at a price $200,000 above market value based on research or 
analysis. He listened to his client's pricing input, which was based on what 
my friend wants to net in order to buy another home for cash and avoid a 
mortgage. Does the prospective buyer of his home care what he needs to 
net? Absolutely not. Starting high is truly a ridiculous approach, but it's all 
too common. Most people who want to start high and reduce later are moti- 
vated by the need to net a certain amount. Sadly, the approach is nearly 
always counterproductive. Aiming too high rarely works. 

Chapter 10: Determining a Home's Ideal List Price / y( 

The only market environment in which you can afford a seller who wants to 
start high and come down later is when prices are rapidly appreciating and 
inventory is low. Even then, be sure you're working with an owner who really 
wants to sell; otherwise you're apt to waste time while your client tests the 
market's pricing tolerances. 

If you find yourself facing a start-high seller, here are a few script suggestions 
to help you get the seller on the right track: 


*<* To figure out why the owner wants to sell and what role price plays in 
the decision, ask, "Mr. Seller, is your motivation to sell your home 
greater than your motivation to achieve a certain price?" 

This powerful question unlocks the seller's motivation vault. Going back 
to the example I share in the "Avoiding overpricing just to please the 
buyer" section, my friend's motivation to obtain an inflated price 
exceeds his motivation to sell. As an agent, I'd categorize him as a home 
lister or market tester as opposed to a seller. 

i^ If the seller's stuck on his own profit motive, work to shift his mindset 
to a buyer's point of view by saying, "When we go out looking for a 
home for you to buy, are you, as the buyer, concerned with what the 
seller needs to net? Don't you think that other buyers are going to feel 
the same way you do?" 

If necessary, add, "Then we can all agree that what a seller needs to net 
truthfully has no real connection to the actual market value of the home." 

This script works well when housing inventory is normal or when an 
oversupply creates a buyer's market. It's less effective in a seller's 
market, where housing inventory is in short supply. In that market, the 
seller's greed drives everything. 


Coming in on-the-button 

Even though too few agents use it, I personally believe that on-the-button 
pricing — that is, pricing a home at market value — is the single best pricing 

Most agents pad listing prices by adding 5 to 10 percent to a home's current 
market value. This strategy is detrimental because even though sellers real- 
ize the overpricing is meant to provide a negotiating allowance, they begin to 
hope to receive at least some of the padding in their own pockets. They rarely 
share that fact with their agents, but it's a true underlying expectation and a 
real downside of padding. The upside is that padded listings create a real 
pricing advantage for homes that come on the market priced at their fair 
market value. 

7 y O P art '" : Developing a Winning Sales Strategy 


A home that's listed at market value stands out from the competition. Compared 
to all the overpriced options, it strikes buyers as a rare value and leads to 
traffic and a high number of showings by other agents. On-the-button pricing 
also leads to a high increase in new business opportunities for the listing agent, 
who meets numerous prospective clients as a result of to the home's ads, sig- 
nage, and online posting. 

Troubleshooting Advice 
for Pricing Problems 

Pricing recommendations hit troubled waters at two predictable times: 

v* When clients have unreasonable price expectations that need to be 
brought in line before the home can be sold 

v* When an agent gets ready to list a property that owners want to sell at 
an inflated, unrealistic price 

Both circumstances require caution. The following sections offer advice as 
you troubleshoot your way through to a successful pricing decision. 


Reducing prices: A fi</estep formula 

When a client has her mind set on a price that's out of line, the following 
steps can help you bring her thinking back to reality. 

7. Nip it in the bud 

If you're dealing with a prospective new client, address the pricing issue at 
the listing presentation. Don't think the difference of opinion will just go 
away, and don't think you can make an easy adjustment later. 

Be proactive. Present your analysis of market realities as they are, not as your 
client may wish them to be. If you delay the discussion, you'll just lose time, 
effort, and emotion later on when you could and should be focusing your 
energy on new business development and other income-producing activities. 

2. Get the dient to agree to come douin 

If a client suggests that she "start high and come down later," have her agree 
at the listing presentation to a scheduled price reduction. In order to start at 
their desired prices, sellers often say something like, "I'll reduce the price to 
your recommendation in 30 days." When they make such a statement, usually 

Chapter 10: Determining a Home's Ideal List Price / yy 

they're simply trying to end the discussion, hoping they can hold out and 
ultimately achieve their target prices. You need to take action and lock in a 
price-reduction agreement there and then in order to avoid the same discus- 
sion a month into the future. 


Use the following script as you respond to the seller's willingness to take 
action in 30 days: 

"Mr. Seller, what I hear you saying is that you'll reduce your price in 30 days. 
Is that correct? You want to try your price for 30 days, but after that, we will 
move to the price I recommended, correct?" 

When your client answers yes to both questions (as clients do in nine out of 
ten presentations, mainly because they've been able to delay the pain and 
want to move on), proceed with the locking technique, using this script: 

"Mr. Seller, since we 're both in agreement about a price reduction in 30 
days, and due to your business schedule and mine, let's go ahead and 
acknowledge your approval of the scheduled price adjustment, post-dated 
for 30 days from now. " 

Although all you're doing is formalizing your client's suggestion, the above 
script will likely be met by a long moment of silence, perhaps accompanied by 
a confused look. The key to a successful outcome is to sit silently — whoever 
speaks first will lose this battle of wills. If you break the silence, almost cer- 
tainly your client won't sign the price adjustment form. Wait patiently, and in 
more than half the cases, you'll get a signed form agreeing to the upcoming 
price adjustment. 

In other cases, you'll at least pave the way for the future reduction, although 
some sellers develop selective amnesia on the subject. If you talk to your 
seller 30 days later and hear, "I don't remember ever talking about having to 
reduce our price," remind her that you asked her to sign a price reduction 
the night of the listing. 

3. Compile pricing feedback from bay 1 

Begin compiling pricing feedback the day the listing hits the market. When 
other agents show the home, follow up by asking them to share their pricing 
opinions. Continue reviewing the prices of comparable homes that have sold 
while your listing's been on the market. 

When interviewing another agent, you may have to really probe to obtain 
useful feedback. For example, ask what top three things the agent's client 
liked about the home. Ask for suggestions for enhancing the salability of the 
home. Most importantly, ask if the price seems competitive with other homes 
shown. If the agent says the price feels out of line, ask what price seems more 

2(/(/ P art '" : Developing a Winning Sales Strategy 

reasonable, and then ask if the agent would be willing to scratch out a quick 
note summarizing the opinion. In future price-reduction discussions with 
your seller, you can back your own recommendation with recommendations 
from other experts. In essence, you can demonstrate that the marketplace 
has spoken in favor of your advice. 

4. Rertsit the price-reduction discussion 

Revisit the price-reduction discussion within weeks of the listing. If you wait 
until 30 days have passed you will have waited too long, and here's why. It 
usually takes one or two weeks to re-open the pricing subject, gain a price- 
reduction agreement, obtain a signature on a price-reduction form, and get 
the new price posted. Therefore, if you wait a month to get started the price 
likely won't be reduced until week six. Studies repeatedly prove that once a 
home's been on the market six to eight weeks, showing activity drops signifi- 
cantly. So if you wait until 30 days to revisit the pricing conversation your 
window of marketing activity will be almost closed by the time you finally 
post the reduction. 

5. Schedule a price-reduction meeting if you hade to 

If a phone conversation with your seller doesn't prompt an agreement to a 
price reduction, schedule a meeting in your office. You raise the odds for a 
successful outcome exponentially when you make the pricing recommenda- 
tion in a face-to-face meeting on your own your turf and in a professional 
environment. As a last resort, you may have to show the sellers the competi- 
tion. Make arrangements to take them on a tour through the other homes 
they're competing against. 

When you call to arrange the meeting, use the following script (in which the 
key word is "exposure"): 

"Mr. Seller, I need to meet with you later this week to discuss the strategy to 
increase the exposure of your home. Would Wednesday or Thursday be 
better for you?" 

The word "exposure" leads the seller to think you'll be rolling out a whole 
new marketing strategy for her home. For that, she'll gladly clear her calen- 
dar. If you say the meeting is to talk about a price reduction, chances are 
good that the seller will try to stall and may even start ducking your calls. 
You have to use the right script and right approach. 

Truth is, the meeting will in fact lead to increased exposure for the listing, 
because price is the factor that most controls exposure. If you can move the 
price into the competitive zone, agents are more likely to show the home, 
and ads more effectively reach a larger group of better buyers. 

Chapter 10: Determining a Home's Ideal List Price £{/ / 

Accepting oi/er-priced listings 

If a seller's motivation is high, you may still want to take the listing. If she 
wants to list her home at a price that exceeds current market value, be sure 
she meets the criteria I cover in this section. Otherwise, you're gambling with 
your time, effort, money, and energy and with the odds of a Powerball win. 


Strong motive to sett 

Your client's motivation to sell is the key indicator of whether you'll earn a 
fee for your service on an over-priced listing. You get paid only when your 
client's property sells and closes, so evaluate and re-evaluate the seller's 
interest and determination to complete the transaction. 

If a client absolutely has to sell — because of a job transfer, divorce, financial 
difficulty, a growing family, or a new home purchase for which sales proceeds 
are required — the odds of a successful closing swing strongly in your favor. 
The pressure of the pending circumstances pushes the seller to complete the 
deal even if it involves a necessary price adjustment. 

A client who has already purchased another home becomes increasingly 
motivated to sell as the pressure of making two house payments comes to 
bear. I've seen clients undergo complete attitude adjustments regarding the 
price of their sale property around the first of the month, when they had to 
write two mortgage checks. Ultimately, the pain of that second check is 
greater than the pain of the price reduction. 


Financial capacity to sett at "true" market Value 

If a seller owes more on the mortgage than the home is currently worth, she 
needs to come up with the difference between the sale proceeds and the loan 
balance at the time of closing. If she doesn't have the necessary resources, 
don't take on the listing at any price. 

Over the past few years, many homeowners have pulled cash out of their 
homes and have taken new mortgages based on appreciated home values 
that have already stagnated or declined. When sellers in this situation get 
ready to sell, they owe more on their mortgage balances than they'll reap 
from the equity they've accumulated. This situation can cause problems for 
the agent. You must be sure that the seller has the equity or funds from 
another source to sell at fair market value and pay your fee as well. 

Set this rule in stone: Take on listings only for owners with sufficient equity 
to sell at real market value or sufficient other assets to make up the shortfall. 

£{/£ Part III: Developing a Winning Sales Strategy 

Willingness to make a long-term commitment 

If you agree to list a property at a price that exceeds its current market value, 
insist on a listing term of at least six months. Six months gives you enough 
time to market the property, reduce the price if necessary, and even put a 
second transaction together if the first one doesn't close. 

Too often, sellers who want to stretch beyond top dollar value also want to 
give you a short time frame in which to prove yourself. Follow this rule 
instead: Insist that the term of your listing align with the price of the listing. 
For example, take a 30-day listing only if it's backed by a 30-day price — with 
a 30-day price defined as a price that is 5 to 10 percent below fair market 
value. Most sellers want a 30-day listing at a price that is 10 to 15 percent 
above market value. No deal! Use the following script to align the listing 
period with the sale price: 

"Mr. Seller, based on the price you want for your home, I'm going to need a 
12-month listing agreement. You're asking a 12-month price, so I will need 
12 months to accomplish a sale. Now, if you want to set a 90-day price of x 
dollars, then I would be able to take a 90-day listing. What is your desire? 
Which of these options do you prefer?" 

Chapter 11 

Getting the House Ready 
for Showing 

In This Chapter 

Preparing a property for a quick sale and maximum profit 

Advising clients on what to do, what to skip, and how to get their homes ready 
for presenting 

Tips for helping a home make a great first impression 

#«^etting a home ready for the big show is necessary to achieve a sale. The 
\4 more competitively the home is priced and prepared, the sooner the 
rigor of showing will end. And, the sooner the sale takes place, the sooner 
your clients can return to their normal routines — except for that little chal- 
lenge of packing and moving. This chapter helps you guide clients as they 
transform their homes from how they look most of the time to how they need 
to look to win attention and positive decisions from prospective buyers. 

AdVisinq Different Kinds of Sellers 

All home sellers come with their own personalities and personal quirks, but 
when it comes to preparing a home for presentation you'll find that nearly all 
sellers fit into one of five categories. As you begin to counsel clients regarding 
changes and repairs that they must consider, it won't take long to recognize 
whether you're working with a Mr. Fix-It, a gung-ho renovator, a stuck-in-the- 
'60s lover of the past, a do-nothing couch potato, or a human calculator. 

At the point of staging a home for sale, each of these personality types brings 
favorable and unfavorable qualities to the task. The secret is to prepare your- 
self and your advice by figuring out early in the relationship just who you're 
working with. The following sections help you understand each of these per- 
sonality types. 

20&4 ' >art '"' developing a Winning Sales Strategy 


Mr. Fix-It 

This seller is ready, willing, and even enthusiastic to dive in and go way over- 
board completing projects before the home is ready to be shown. 

Think of Tim "The Tool Man" Taylor and you'll have a good idea of this seller's 
enthusiasm and approach. Then think of the results you've seen on the Home 
Improvement show for a good sense of the kind of outcome that may be in the 
script. Your only problem is that Al won't be around when you need him. 

u* The Downside: Mr. Fix-It has all the tools and is ready to use them at the 
drop of a hat. The problem is the work may not be done to industry 
standards, and so instead of an improved condition, the home could end 
up with more problems than it had to begin with. 

u* The Solution: When you spot a Mr. Fix-It, discuss changes in detail 
before any work begins. Discuss industry standards of quality with Mr. 
Fix-It. Ask him if he knows what the finished product would look like if a 
licensed and bonded contractor did the work. Ask about industry stan- 
dards for nailing, painting, gluing, plumbing, tiling, dry walling, roofing, 
and other tasks that may sound easier than they really are. 

You want to ask Mr. Fix-It the questions about quality to ensure he has 
the skill to produce a product that meets or exceeds industry standards. 
Poorly executed repair work is obvious to potential buyers and can stop 
them from making an offer on the property. Or, they may offer a lower 
price due to the low-quality repairs. 

Bring the seller's spouse or significant other into the conversation. The 
person who lives with a Mr. Fix-It understands where the power tool 
obsession ends and repair ability begins. With luck and skill, together 
you'll keep enthusiasm in check and help put a damper on the idea to 
jack up and rotate the house so that the front yard becomes the back 
yard, giving the kids more room to play. 

The qumq-ho renoi/ator 

Gung-ho renovators are owners who do everything way over the top. When 
it's time to prepare their home for sale, they practically create a whole new 
house before marketing begins. Once their makeover is complete, they some- 
times find the results so impressive that they pull the property off the market 
and stay to enjoy the outcome of their efforts. 

*<* The Downside: Without good counsel, these owners cross the line 
between repairs and remodeling. Along the way, they spend way too 
much time and far more money than they can recover when they sell. 

Chapter 11: Getting the House Ready for Showing 203 

is* The Solution: Be clear about the seller's objective when preparing a 
home for sale. Impress upon the owners that the aim is to economically 
increase the warmth and desirability of the home and to remove poten- 
tial objections that buyers might have against the home. The goal is not 
to achieve perfection. Remind them that in home fix-up, repair, and stag- 
ing they'll find a point of diminishing return. It's easy for the gung-ho 
seller to cross that line. 

Stuck in the '60s 

With no further description, you know the look of a stuck-in-the-'60s seller's 
home. From furnishings to artwork to floor coverings and color schemes, the 
entire place is decades out of style and, worse still, the owners love it the 
way it is. I know firsthand, because I watched the family home I grew up in sit 
too long on the market because it was stuck in the past. My mother loved the 
colors of the '60s and was resolute to keep them in place for as long as she 
was alive. 


i^ The Problem: The decor is so overwhelmingly dated that buyers have a 
difficult time getting past the aesthetics and imagining what it would be 
like to redecorate and move into the home. 

v* The Solution: Somehow, you have to point out to the sellers that the 
look of the '60s (or the '70s and '80s, for that matter) needs to be toned 
down, dialed back, or moved forward a few notches in order gain buyer 
interest in the home. Younger buyers have no nostalgia for the "old 
days" and many older buyers don't care to remember the decor from 
that era. 

Most times, sellers won't do a complete redecoration. Often the best you 
can hope for is removal of the shag carpet. From that point on, you may 
have to artfully sell around the avocado-colored appliances. 

The couch potato 

Coach potatoes want top dollar for their homes but don't want to lift a finger 
to get it. Their favorite tool is the remote control. 

i^ The Problem: Sellers in this category claim complete satisfaction with 
their home just the way it is. They don't want to clean it up, pick it up, or 
repair it so it works better. They feel that someone out there is willing to 
pay top dollar for the home, regardless of its mediocre condition. They 
simply want the agent to find them the right buyer. Couch potatoes are 
also the people who insist they always win when they go to Las Vegas. 


Part III: Developing a Winning Sales Strategy 

*«* The Solution: Seek a compromise. Make a list of recommended repairs 
and get the owner to take action on at least some items, because some- 
thing is better than nothing. Then work to adjust the owner's price expec- 
tations in light of the property conditions you've exposed. The owner 
either has to settle for repairs or a lower asking price — they can't have 
it both ways without hurting the agent's stats. 


The calculator 

Of all the types of sellers, human calculators can be the most difficult. They 
can tell you, in detail, every investment they ever made in their home. If you 
want, they'll be happy to provide you with receipts. 

i* The Downside: These sellers expect to recoup every dollar they ever 
spent fixing up their home. If you counsel that additional work is needed 
to prepare the home for sale, they'll expect the sale proceeds to reflect 
at least a dollar-for-dollar reimbursement of the expenses involved. 

*<* The Solution: Reorient the sellers' view of the task at hand — preparing 
the house for sale. Explain that the recommended investment covers 
improvements that bring the home back up to expected consumer stan- 
dards and make it competitive in the current marketplace. Help the 
owners understand that they're preparing their home not to achieve a 
higher sales price, but to gain buyer consideration that leads to a timely 
purchase offer. 

Counseling Clients on 
Home Improvements 

Before you start to counsel owners about home improvements, remember 
these two rules: 

u* First and foremost, never counsel before you're hired. Counseling hap- 
pens after a client-relationship is established. Attorneys don't offer legal 
advice before their services have been officially retained. Doctors don't 
diagnose without assurance of compensation. Real estate agents should 
follow suit. Wait until the listing agreement is signed. After it's signed, 
begin giving counsel regarding how the owner can achieve a quicker sale 
or higher price by making recommended home improvements and 
implementing staging advice. 

Chapter 11: Getting the House Ready for Showing 20 / 

Too frequently, agents give away their expert counsel during listing presen- 
tations in hopes of proving their ability and expertise to sellers. More often 
than not, though, the sellers simply take the counsel with them when they 
link up with an agent who is less skillful but promises a cheaper fee. 

i<* Second, tell the truth. If the sellers need to clean the home, tell them. If 
they're smokers and the house reeks from cigarettes, or if their pets are 
causing odor problems, tell them. 

Likewise, appearances can kill buyer interest. If the home is crowded 
with too much stuff, say so. If the pink exterior color may cause people 
to drive right on by, speak up. Holding your tongue only delays the day 
of reckoning. What's more, it's easier to be totally frank when you first 
notice the problem — though only after the listing contract is signed). If 
you counsel before you gain commitment, your advice may offend the 
sellers and cost you the listing. This is another reason to follow Rule #1 
and get a signature before giving counsel. 


Improvements that contribute 
to the sates price 

When it comes to preparing a home for sale, worthwhile and necessary 
improvements fall into three categories: 

I" v* Improvements that bring a home back to standard. 
v* Improvements that correct defects. 
*-" Improvements that enhance curb appeal or first impressions. 

The following sections provide guidelines for each area. 

Bringing a home back to standard 

Before you present a home with horribly dated decor, counsel the sellers to 
modernize the interior look to align it with the expectations of current-market 
buyers. Sellers don't have to go overboard; they just need to use a reason- 
able color scheme and provide enough of an update so that new owners feel 
they can move in without having to undertake an immediate facelift. Share 
the following advice with sellers: 

*«* Keep improvements simple. A total redecoration isn't necessary or 
even advisable. The objective is to arrive at a widely-acceptable and 
reasonably-current color scheme with paint, counters, and floor 

2(/8 P art '" : Developing a Winning Sales Strategy 


is* Don't aim to create a design showpiece. Realize that following the pur- 
chase buyers often change a home significantly to make it their own. 
The sellers' objective is to allow prospective buyers to feel that their 
changes can happen over the next few years — that they're not glaringly 
and immediately necessary. 

is* Focus on the big stuff. If the interior of a home looks current and the 
landscaping, yard, decks, and patios are well kept and serviceable, the 
buyers' need to make significant, immediate changes lowers greatly. As a 
result, they'll be more likely to buy the home. They may also make a 
more competitive initial offer than would be the case if the home pre- 
sented obvious exterior or interior color or repair issues. If buyers have 
to make changes to a home, they have to pay for them with their own 
personal funds, not with money they borrow. Many buyers consider this 
fact when deciding which home they should buy. 

u* A little paint makes a huge difference. Repainting is one of the most 
cost effective ways to freshen the look of a home. It can even disguise 
design shortcomings. 

«-" Steer clear of the latest trends. Counsel clients to shy away from the 
current rage in deep wall colors. Advise them to create a warm, blank 
canvas that any prospective buyer can work with. 

Correcting defects 

If a home has defects, the seller has two choices: Fix them or provide equal 
monetary compensation to the buyers. 

For example, if a roof needs repair or replacement, the improvement will be 
expected by both the bank and the buyer. The seller can offer one of the fol- 
lowing two remedies: 

is* Handle and pay for the repair or replacement. 

*«* Provide the buyers with sufficient compensation to cover the cost and 
hassle of correcting the defect themselves. Hassle compensation is 
money above what it costs to professionally correct the problem. The 
amount extended for hassle compensation differs by task and buyer. In 
most cases, though, if buyers have to collect and decide between con- 
tractor bids, arrange for repairs, and check the work of the contractor, 
they'll want some compensation for their time and effort. 

Other items that may need to be addressed are excessively worn carpet 
or windows whose seals have been broken and condensation has built 
up between the panes. 

Enhancing first impressions 

Any cost-effective improvement that adds curb appeal or enhances first 
impressions can increase the sales price. Here are a few improvements the 
seller can do: 

Chapter 11: Getting the House Ready for Showing 20 y 

u>* Create dimension on the exterior of the home by adding shutters or fish 
scale over a garage gable, selecting a better color pallet, and, certainly, 
spending a few hundred dollars to plant annuals to brighten the exterior 
walkways. The effect will increase the probability of a sale and positively 
influence the sale price. 

*«* Inside the house, after improving the home's paint color scheme, advise 
sellers to assess the quality of the home's hard surfaces, including 
carpet, tile, vinyl, and counter tops. Replacing surfaces is often far less 
costly than buyers anticipate. Many choices look expensive but aren't. A 
seller doesn't need to put slab granite on the kitchen counters. Simply 
updating old, cracked, and chipped Formica will deliver a great improve- 
ment and pay off when it comes to price negotiation. Choosing a light 
surface can create a feeling of a larger, brighter room. 

is* When working with a limited budget (as most sellers do) counsel the 
sellers to improve surfaces in core areas first. Focus on the areas most 
used by buyers, which include the kitchen, family room, bathroom 
(especially the master bath), and master bedroom. 

Improvements to skip 

As a general rule, I advise sellers to skip any improvement that isn't simple or 
doesn't affect curb appeal. 

The myth of the bargain in the basement 

Advise sellers who want to increase home 
value by finishing their basements to proceed 
with caution for the following reasons: 

j-" Any remodel returns only a portion of its 
cost at the time of sale, and historically 
basement remodels yield the lowest return 
of all. 

j-" Even if the home is on a sloping lot that 
allows for a really nice walk-out or daylight 
basement, in many areas of the U.S. the 
value of the basement square footage is 
half that of ground-level or above-ground 
level square footage. 

*<" Too many sellers calculate home price or 
value on a square foot basis, and therefore 
they see an unfinished basement as a kind 
of lotto ticket. This is especially true for Mr. 
Fix-It and gung-ho personality types, who 
see the unfinished basement as an easy 
route to a higher home price. 

Use these facts to help your sellers understand 
that their finished basement is likely not going 
to return the dollars they put into the remodel, 
and that the resulting additional square footage 
will almost certainly be worth less than they 

2 1 (/ P ar t HI: Developing a Winning Sales Strategy 

When sellers ask about replacing cabinets, remodeling rooms, building book- 
shelves, replacing siding, adding decks, and even finishing basements, share 
the following facts: 

«-** According to Remodeling magazine and the National Association of 
Realtors, the average major investment update on a home recoups 81 
percent at resale, or only four out of five dollars spent. 

*<* The highest average rate of return results from a minor kitchen remodel, 
which yields 93 percent of the costs incurred. 

*<* The lowest average rate of return comes from finishing a basement, 
which yields a 76 percent return. See the upcoming sidebar titled "The 
myth of the bargain in the basement" for more details on the risks of fin- 
ishing a basement. 

u* The more money spent, the higher the risk for the seller and the lower 
the chance of making a return or even breaking even. 

Passing the Curb Appeal Test 


As a listing agent, one of the first rules of real estate you need to remember is 
that you have to get prospective buyers and other agents into the house that 
is for sale. They won't buy it — or advise others to buy it — if they don't step 
inside to see it. Real estate investors are the only exception to this rule: 
They'll often buy a house without ever looking at it. However, most sellers 
don't want to settle for the price a shrewd investor would pay. To get top 
dollar, you must win the curb appeal game. 

As an agent, nothing is more discouraging than giving up your Saturday or 
Sunday afternoon to host an open house, only to watch cars drive by without 
stopping all afternoon. The culprit is almost always a lack of curb appeal — 
or first-glance pizazz. The second most common reason is that the home is in 
a less-than-desirable neighborhood. 

Few people have the gift to see what a home could look like. My wife, Joan, 
has that gift. She can look at a listing that I know isn't quite right and tell me 
exactly what to suggest to the seller. The upcoming sections provide similar 
advice for you to follow. 


Landscaping recommendations depend largely on the age of the home you're 
getting ready to show. Newer homes are frequently so under-landscaped that 
they look remarkably like the surface of the moon. Meanwhile, older homes 

Chapter 11: Getting the House Ready for Showing 211 

are surrounded by such overgrown trees and bushes that they look like the 
jungles of Brazil. 

Know the age of the home you're listing and more often than not you'll imme- 
diately know what kind of tool your sellers need to use to ready their prop- 
erty for showing: a machete or a shovel. 

The most frequent curb-appeal obstacle comes from overgrown landscaping, 
which needs to be attacked with the following steps: 

i^ Trim trees to create openness in the yard area. Large fir or evergreen 
trees can make a yard look smaller than its actual size, particularly if 
expansive branches hang close to the ground. Advise the seller to 
remove some of the limbs of larger trees so that there is a 12 to 15 foot 
gap off of the ground. 

is* Use the space opened by tree trimming to plant colorful annuals, 
which will brighten up the yard. You should also use annuals to 
brighten the sidewalks and paths to and around the front door. 

w* If the seller's yard features grass, make sure it's healthy and green. 

Recommend that sellers put down extra seed or replace sod in troubled 
spots if necessary. You want to achieve a look that's more like a golf 
course than a motocross course. 

V Add landscape dimension to otherwise flat lots with plants, berms, or 
rocks. Don't overdo it, but do add a little height and depth to break what 
otherwise might look like a dull lot. 

*<* Create dimension through color. The landscaping can look pretty 
monochromatic if you're presenting a home in a season other than 
spring. Colorful plants go a long way toward adding visual interest and 
strengthening curb appeal. 

Exterior paint condition and color 

In a split-second, the color and condition of a home's exterior paint can 
either attract or repel a prospective buyer. 

«-" Color: Recommend that sellers think long and hard about pastel colors 
like robin's egg blue or baby pink, or color schemes that resemble the 
uniforms of their college or university teams. Just as with hard surfaces 
on the inside, the exterior of a home for sale should be painted in clas- 
sic, muted tones, such as taupe or beige with a soft accent color that is 
slightly darker than the body of the home. 

The architecture of the home can contribute to the decision regarding 
what colors are appropriate for the home. For example, white paint on a 

£l£ P ar t '" : Developing a Winning Sales Strategy 



colonial-style home can enhance the property's visual impression from 
the curb, evoking the image of great, stately homes such as the White 
House or President Washington's Mt. Vernon home. However, the same 
white paint on a 1950s or 1960s ranch home may result in a house that 
looks like a plain little box with no character. 

*«* Paint condition: Buyers are quick to cross homes in need of new paint 
off their lists, whether the chipped paint is on the body or trim of the 
home or on fences or railings. 

The worst outcome is when a prospective buyer drives by, but doesn't 
stop. However, even if he decides to stop and look at the house, trouble 
still lurks. If the exterior paint condition is poor and buyers consider the 
home anyway, you may wish they hadn't, and here's why: Once buyers 
notice that paint is peeling, cracking, chipping, or stripped down to bare 
wood, they go into high-scrutiny mode and begin to pick the home 
apart. Rather than looking for wonderful things about the home, they 
fixate on what they think is wrong. They assume that because something 
as obvious as the paint is in poor condition that other aspects of the 
home were also neglected. A buyer determined to find faults will suc- 
ceed. No home can withstand a microscopic faultfinding inspection. 

Even if the home passes the inaugural buyer examination, the sellers 
aren't out of the woods. If the buyer decides to make an offer, almost cer- 
tainly it will be accompanied by an extensive repair list and the request 
that every minor offense be rectified before the closing. Then a home 
inspector will enter the picture, providing a more extensive report and 
the chance for the buyer to hit the seller up all over again. All this hap- 
pens because of a little chipping paint that could (and should) have been 
fixed before buyers ever drove by to view the home in the first place. 

Preppinq the Interior of the Home 

Once prospective buyers are through the door, you need them to be greeted 
by a good first impression. Help sellers achieve the lightest, brightest, and 
largest interior possible by taking the upcoming advice to heart. 

In preparation for this chapter, I put myself in the seller's shoes and looked 
around our own home, asking myself what we'd need to do if we wanted to 
sell. Big surprise: We'd need to rid each room of our home of tons of belong- 
ings, decorations, and furniture. We all have too much stuff. We have kids 
whose toys are broken or aren't played with anymore. We have clothes that 
hang in closets for years while we await the miracle weight-loss drug. One of 
the reasons homes over the years have grown in size is because we need 
more and more room to put our stuff. 

Chapter 11: Getting the House Ready for Showing 21 J 

To help sellers prepare their home interiors for showing, have them take two 
initial steps: 

i<* Get them to rent a drop box or large dumpster and throw away any- 
thing they haven't used in a while. In fact, you may benefit by doing the 
same thing in your own home. You'd be amazed at how invigorating it is 
to have that drop box in the driveway for a weekend. It's almost like a 
game to see how far and how fast you can fill it to the top. For most 
people who've lived in the same home for a while, it won't take long. 

*«* Convince the sellers to rent a storage unit. After filling a dumpster to 
the gills they may still have things that should be moved out of the 
house even if they don't want to move them out of their lives. A storage 
unit provides an inexpensive, readily available solution. 

After these initial steps are taken, you and the sellers can focus on other 
ways to make the home more appealing to potential buyers. Read on for 

Staqinq a home 

The term staging a home describes the process of rearranging and decorating 
a home's interior in an effort to downplay deficiencies and accent strengths. 
In its simplest form, staging involves adding specialty accessories like towels, 
candles, throw rugs, bedding, pillows, dishes, napkins, and stemware. Staging 
at its most extensive level involves rearranging or replacing furniture or even 
adding specialty furniture pieces to create a feeling of comfort and livability 

Before you advise clients on the staging process, gain knowledge about basic 
staging techniques and outcomes by visiting newly developed neighborhoods 
with model homes. Invest the time to see how new homes are being shown. 
Notice how the most appealing homes present master baths. Take a close 
look at desirable kitchens to see what is and isn't on the countertops. Note 
how towels, dishes, and glassware are displayed. Most of all, study how furni- 
ture is arranged in variously shaped rooms to create an environment that is 
open, warm, and comfortable. 

If you're really challenged by staging and design, turn to pros for help. In 
most real estate markets you'll find people who specialize in staging homes 
for sale. Many interior decorators offer hourly consultation. Others offer, for 
a fee, full-service staging, where they work up a design plan, bring in the 
furniture and accessories, handle the installation, and dismantle it all after 
the sale. 

211) P art l" : Developing a Winning Sales Strategy 

Find out the names and experience levels of staging or interior design spe- 
cialists in your market area. Then be ready to convince your sellers that it's 
in their best interest to invest in their home's interior look. Remind them that 
well-staged homes attract not only buyer prospects but also agents, who 
want to show attractive homes. In many cases, the investment pays off in two 
ways: A faster sale and a higher price. 

Clearing the clutter 

When buyers are house shopping they're given the challenge of mentally 
removing the seller's stuff before deciding whether they actually want to 
move in. This type of mental gymnastics helps buyers assess how well the 
home they're viewing will accommodate their own possessions. (See the sec- 
tion "Helping the buyer 'move in'" later in the chapter for tips to help buyers 
with these mental gymnastics.) 

Some sellers' homes are so full of garage sale and flea market finds that the 
buyers honestly can't see the home through the clutter. They can't "move in" 
because they can't see anywhere for their own things to go. 

If you're working with sellers who are surrounded by clutter, do the following: 

u* Advise them to remove excessive amounts of accessories and knick- 
knacks. Whether they get rid of them altogether or pack them up in 
preparation for their anticipated move, get them out of sight. The result 
can do wonders for a home's interior appearance. 

u* Dismantle what I call the "shrine wall." A wall of pictures of children, 
grandchildren, nieces, nephews, friends, acquaintances, and snapshots 
of every experience the owners fondly remember adds clutter with little 
to no buyer appeal. 

u* Follow the design rule, "When in doubt, take it out." Advise sellers to 
keep clutter, wall decor, and placement of figurines and mementos to a 
bare minimum. 


What "stuff" to keep and What to remote 

The point in showing a home is to allow prospective buyers to mentally move 
in and assess how well the home fits with their lives and possessions. Real 
estate agents know to listen and watch for buying signals, and one of the 
clearest and best signs is when buyers discuss how their own belongings 
may fit in various rooms. 

Buyers can hardly think about where their piano, china cabinet, or most- 
treasured family heirloom will go when they can't get their eyes past the 
visual onslaught of furnishings, accessories, and clutter of the current 
owners. Use the following information to guide your recommendations 

Chapter 11: Getting the House Ready for Showing 213 

regarding what sellers should leave in place and what they should move out 
prior to home presentation. 

*-" Pictures: Suggest that the owners pack up all but a few of the personal 
photos in the home. If they have a wall covered with pictures, advise 
them to pare down to just a few. 

is* Appliances: Except the ones that get used daily, store all small kitchen 
appliances. Leave the coffee maker on the counter, but lose the blender 
and maybe even the toaster. 

i^ Vanity items: Remove most of what is on the bathroom vanity, including 
decorations and toiletries. A collection of items draws attention to a 
small vanity size. 

«-" Closets: Thin clothes out of closets to create the illusion of greater 
space. Even a good-sized closet that is crammed with clothes looks 
undersized and inadequate. 

is* The garage: Too often, what gets removed from the home goes into 
the garage. Don't let your sellers make this mistake. Ask them to move 
household items into a rented storage unit instead. While they're at it, 
they can move garage items — from extra sets of tires to out-of-season 
recreation equipment — to the storage unit. Then advise them to orga- 
nize what's left. Suggest that they hang bicycles from the ceiling and 
install a few inexpensive pre-made cabinets to hold paint cans, tape, 
shop rags, toolboxes, and the rest of the amazing collection of stuff that 
ends up in most garages. The objective is to end up with a clean, spacious 
garage that adds openness and perceived square footage to the home — 
and dollars to the seller's final sales price. 

If you encounter seller resistance, remind your clients that they're going to 
have to pack their stuff up anyway. By preparing their home for presentation 
they eliminate visual clutter and get a leap on the packing process at the 
same time. 

Simplifying traffic flout 

The design rule, "When in doubt, take it out," applies to furniture as well. 
Rooms that feel cramped and hard to move through usually have too much 
furniture in too little space. 

To make a diagnosis and suggest recommendations, do the following: 

*<* Walk through the home to find the spots that feel cramped. Where do 
transition areas from room-to-room, or from one part of a room to 
another, feel restricted? 


Part III: Developing a Winning Sales Strategy 

f" Make recommendations to improve traffic flow. The sellers can't move 
walls (without great expense), but they can move furniture that restricts 

is* Evaluate the number of pieces of furniture in each room and note the 
sizes of each piece. Ask yourself the following questions: 

• Are too many pieces of furniture crowded into one room? 

• Are furnishings too large and beefy for the room? 

• Does the furniture arrangement work in terms of space and flow? 

*«" Be on the lookout for small, decorative pieces of furniture. These 
pieces are often the biggest culprits when it comes to restricting walk- 
ways and creating a crowded feeling. 

Most people have too much furniture in too small of a space. Be ready to 
recommend that the sellers remove furniture to create more open spaces, 
which makes the home appear larger and more comfortable. 

Your furniture-removal recommendations will most likely be met by owner 
resistance. Sellers will resist because they think that there won't be any place 
for people to sit. Stick to your story: Tell them a home with too little furniture 
almost always shows better than a home with too much. 

Toning it dovin 

Themed bedrooms — those with wallpaper, wallpaper borders, sheets, pil- 
lows, comforters, and wall hangings that all match — are very popular for 
children today. The problem is that buyers walk in and can't see an alternate 
use for the room. If they can actually see an alternate use, they may also see 
the considerable expense and effort it will take to get the room from where 
it is to where they'd like it to be in terms of decoration and usability. As a 
result, the seller will likely offer a lower price, if they make an offer at all, in 
order to cover the costs they anticipate when replacing the theme with a 
more neutral design. 

Be on the lookout for the following red flags: 

*<* Loud or outlandish paint colors or wall coverings 

v* Immediately visible and highly personalized themes. For example, a 
vibrant pink bedroom with lots of stuffed animals might be off-putting to 
empty nesters or a family that has only boys. 

Explain to the sellers that some buyers may be design-challenged and may 
have little sense of how to redecorate or of how much it costs to paint or 
wallpaper a room. Tell them that a more neutral design will attract more 
buyer interest and command a higher price. 

Chapter 11: Getting the House Ready for Showing 21 7 


House clean-up checklist 

Don't assume that buyers understand what needs to be done before a show- 
ing, even if they have bought and sold a home before. Take a proactive stance 
by providing a detailed step-by-step checklist of the steps they need to take 
before the first buyer presentation. The chart in Figure 11-1 provides you 
with a good sample to follow as you provide your clients with valuable coun- 
sel and help them ready their home for presentation. 

Figure 11-1: 

and pre- 

House Clean-Up and Presentation Preparation Checklist 





Hire professional cleaners to eliminate odors from pets or 
smoking, clean carpets, polish wood floors 


Interior Walls 


Repaint to achieve a neutral, broadly accepted, contemporary 
color scheme; tone down bold colors 

Repaper or repaint to eliminate themed rooms that limit 


Interior Hard 



Replace dated carpets 

Replace dated counters with light, bright surfaces, focusing 
efforts on key areas in which owners spend the most time 


Exterior Paint 



Repaint to eliminate chipping, blistering, or peeling and to 
achieve a neutral, contemporary color scheme 

Repaint fences and railings if necessary 



Thin or limb large trees on mature lots 

Plant annuals to add spot color 

Reseed or resod lawn 

Add dimension to flat lots with berms, plants, and rocks 


2 1 P art '" : Developing a Winning Sales Strategy 

Clutter Removal 


Rent chop box or dumpster 


Rent storage unit 


Clear out old, unused, outdated belongings 


Pack up and store accessories and knick knacks 


Dismantle walls of photos, leaving only a few good-quality 
framed pictures as decoration 


Remove most small appliances from countertops, leaving 
only ones you use on a daily basis 


Remove items from bathroom vanity 


Remove items to open space in closets 



Traffic Flow 


Remove small pieces of furniture that restrict walkways 


Remove large pieces of furniture that crowd spaces 



Home Defects 


Repair defects or be prepared to provide 
compensation to buyers 



Move storage and out-of-season items to a storage facility 
Hang bikes and other equipment from walls or ceiling 

Figure 11-1: 



Install storage cabinets 

Final Ways to Make a 
Great First Impression 

Selecting a home is not a logical undertaking for most buyers. Instead, it's more 
of an emotional upheaval. Most buyers are swayed by the initial emotions they 
feel when they first walk through the door of a potential new home. Almost 
instantly, the home either feels right or feels wrong. 

Rarely do people warm up to a home. Once buyers receive a first impression, 
they soon figure out whether or not a home is "the one." That first impres- 
sion can be the beginning of a sales success, or it can be a prohibitive factor 
that will be difficult to overcome. 

Chapter 11: Getting the House Ready for Showing 21 y 


I remember hearing my mother tell the story of helping my grandmother find 
a home to buy. They had looked at many homes before they walked into one 
that my grandmother actually liked. In fact, within two minutes she was danc- 
ing around the house saying, "This is the one I am going to buy. I want to this 
house now." All logic went out the window the moment she found the com- 
fort, warmth, and space for her large dining room furniture. It didn't matter 
that the home was next door to a car wash with loud air blowers (fortunately, 
my grandmother was hard of hearing). It also didn't matter that it was about 
100 feet from a major street with heavy traffic. It felt right to her, and she 
bought it that day. 

Good first impressions, feelings, and emotions control the sale, and logic 
takes a distant second place in the decision process. For this reason, you 
want to ensure that your home makes a good first impression with potential 
buyers. In the following sections, I share a few finishing touches that can 
make all the difference. 

Enhancing the first glance 

A home has ten seconds to make a good first impression. All the senses are in 
play, and either a home passes or fails the initial test. 

Use this advice to positively engage all the senses in the first moments of the 
buying experience: 


**" Scent: Fill the home with smells that invoke feelings of comfort, warmth, 
and calmness. Suggest that the sellers bake cookies or bread or some- 
thing that fills the home with a warm honeylike aroma prior to presenta- 
tions. If your clients aren't quite Martha Stewart types, suggest that they 
put a few drops of vanilla on some aluminum foil in a warm oven. Or, 
create a positive aroma with potpourri or incense. 

Don't overdo it with the scents. A scent that is too strong can drive 
buyers out of the home before they even get a good look. 

U* Sound: Play soft, soothing music that is considered pretty-much univer- 
sally acceptable, such as classical pieces with limited instruments or 
even just piano music. Gangster rap or loud rock would be unadvisable. 

If the home has a sound system wired throughout each room, your 
music selections also give you an opportunity to demonstrate this fea- 
ture of the home. 

*«* Ambiance: Ask the sellers to create a visually inviting environment by 
preparing a nicely set dining room table. Suggest that they place small 
flower arrangements in various rooms. You may even recommend that 

££{/ Part III: Developing a Winning Sales Strategy 

they build a fire in the fireplace if the home's for sale during the fall or 
winter months. 

v* Brightness: Open all the blinds and draperies to let in natural light and 
make the home appear larger. Also turn on lights in corner areas to 
pull the eye to the perimeter of the room and provide a sense of 
expanded space. 


Helping the buyer "moVe in" 

When showing property to buyers, your job is to help clients imagine living in 
the home. The quicker you can get them thinking about actually moving into 
the house, the more quickly you'll help them make their decision. 

The way to help the buyer mentally move in is to ask questions like these: 

«-** Susan, would you arrange your furniture this way? 
u* Which of these bedrooms would be best for Bobby? 
*-" Where would you place the swing set? 
*«* How would your oval nook table fit in this nook area? 
v* Where in the garage would you put your workbench? 
»<* Where do you think the big-screen TV could go? 
f" What do you feel is the best location for your piano? 

Any question that engages the buyer's imagination is a good question. If the 
answers convey negative feedback, the home is probably not the right one 
for the buyer. After you realize this fact, you can cross if off the list and move 
on to another home. 

I've watched too many agents walk buyers through a home making absurd 
comments like, "This is the family room," as if the client may have mistaken it 
for a kitchen. Assume, quite safely, that buyers know which rooms are living 
rooms, kitchens, and bedrooms. They don't need an agent to tell them what's 
what. But, they do need you to help them trigger their imaginations so they 
can decide if the rooms are right for them. 

Chapter 12 

Marketing Yourself and Your 
Properties Online and in Print 

In This Chapter 

Targeting the market you want to reach 

Figuring out how to position each property 

Writing and producing real estate ads and flyers 

Putting the Internet to work in your promotional program 

yl^arketing is the one topic that gets all agents to stop and listen. It's a 
/rl big field that takes time, money, and an almost bewildering number of 
decisions. Marketing, as it should be, is high on the To Do list of anyone 
trying to make a sale. 

I'm willing to bet that most agents spend more time wondering and worrying 
about how to market than they spend actually marketing. And the confusion 
is well-founded. The choices you face as an agent are practically without 
limit, and you have to compete with every other company that markets to 
consumers on a daily basis. Hundreds of times each day consumers are inun- 
dated with television and radio commercials, newspaper and magazine adver- 
tisements, direct mail marketing (including a flood of junk mail), online 
marketing (too much of it in the form of spam), outdoor signs, and countless 
other marketing messages. 

The solution is to focus. Focus on what you want to accomplish, what you 
want to communicate, and who you want to reach with your message. 

At its core, real estate marketing is simply a matter of communicating a mes- 
sage about what you have to an audience that may or may not want what 
you're offering. If that sounds like a simple definition, it's because marketing 
real estate services and products is really not all that complex, as long as you 
take a focused approach. In this chapter, I share with you some advice on 
how to proceed. 

222 Part III: Developing a Winning Sales Strategy 

Targeting \lour Marketing Message 

Agents turn off on the wrong marketing road when they try to take communi- 
cation shortcuts by blitzing the market with their ad messages. This route 
leads to a dead end for two reasons: 

u* You don't have the budget of McDonald's or Anheuser-Busch, so you 
can't compete well in the mass media environment. 

W Your prospective customer is already drowning in daily marketing mes- 
sages. Simply lobbing another ad missile into the general market arena 
is hardly the way to target the person you're trying to reach. 


Due to the successful efforts of media salespeople, agents get roped into 
spending huge sums of money on image- or brand-building marketing cam- 
paigns that reach large, untargeted groups of consumers and that produce 
zero sales results. 

Agents at the top of their games may want to reinforce their dominant market 
positions and enhance their strong reputations by shifting some of their mar- 
keting dollars into image advertising. But, if you're an agent just beginning to 
ascend the ladder of real estate success, image advertising is not what you 
need. At this point in your career, you need to reach highly targeted 
prospects with messages about specific offerings that align perfectly with 
their interests and needs. 

As you plan your marketing communications, think in terms of who, what, and 
why: Marketing communications is anything that you mail or e-mail to the gen- 
eral public, your sphere of influence, or to the people on your past client list. 
You must have a plan and an objective before you slap on that stamp. 

u* Who is your target audience? 

v* What are you offering to your target audience? 

v* Why is the product you're offering a good fit for the wants, needs, and 
purchase abilities of your target audience? 

In this section, I help you target your marketing audience, define your prod- 
uct, and determine the position your product fills in the marketplace. 

Defining yow target audience 

Before you can choose how you're going to communicate your message and 
what you're going to say, you need to know who you're trying to talk to. 

Chapter 12: Marketing Yourself and Your Properties Online and in Print 223 

The single biggest mistake in advertising — not just real estate advertising, 
but in all advertising — is that marketers create ads without a clear concept 
of the people they're trying to influence. As a result, they use the wrong 
media, say the wrong things, and fail to inspire the right outcome. 

Before you risk a similar mistake, begin by answering these questions: 


u* Who are you trying to reach with this particular message? Be specific: 
What age and what income level and where do members of this group 
currently live? 

i* Will this message be going to people you know? If so, it can (and 
should) be more personal than an ad reaching brand-new prospects. 
People that already know you will most likely be the ones to consider 
doing business with you. Move them toward action by stressing your 
results and professional credentials while also conveying the benefits 
and features of the offer you're presenting. 

*<* Is this marketing message targeted to specific buyer groups, such as 
first-time homebuyers, empty nesters, second home purchasers, or 
investors? If so, you need to focus your message toward the interests, 
needs, and motivations of that specific group. 

i* Is the market for this message comprised largely of consumers in a 
specific age group or generational demographic? If so, decide whether 
the offering you're promoting will be of primary interest to one of the fol- 
lowing groups of consumers: 

• The senior generation, whose members are now 65 years old 
and over 

• Baby boomers born into Western societies post-World War II 
between the years of 1946 and 1964 

• The post baby-boom generation born between the mid-1960s and 
early 1980s, who are sometimes referred to as Generation X or 
Generation Next 

• People born between the mid-1980s and mid-1990s, labeled by mar- 
keters as Generation Y, the Echo Boom, or the Millennial Group 

The prospects in the older generations still remember the Great 
Depression, World War II, Kennedy's assassination, man landing on the 
moon, and Watergate. Younger audiences have never known a world 
without MTV, cell phones, and the Internet. Obviously, you'll want to 
develop different messages and choose different media approaches to 
reach each group. 

The National Association of Realtors (www. realtor . org) and most of 
the large real estate companies have conducted extensive research to 
define how the prospects in each of the various generational groups 

££ll Part III: Developing a Winning Sales Strategy 

relate to real estate marketing, sales, and servicing. Training courses on 
this topic are ongoing. Watch for one, enroll, and invest a few dollars and 
a few hours to refine the strategies and tactics you use with consumers 
in each of these generational age groups. 

Positioning yow offering 


In today's cluttered marketing environment, consumers are trained to tune 
out messages that don't seem to address their real and unfulfilled wants and 
needs. In other words, if your message doesn't clearly deliver a solution to 
your prospect's exact problem — if it doesn't position itself into an open slot 
in your prospect's mind — then your efforts, dollars, and time will go down 
the marketing drain. 

Positioning is the marketing art of knowing what available space or position 
you and your offering fill in the market and then getting that message to 
exactly the people who want what you're offering. 

By first figuring out the position your offering fills, you can easily decide who 
you want to talk to, what you want to say, and what marketing vehicles — 
from advertising to direct mail to online to personal calls — you need to use 
to reach the people you're targeting. 

Positioning the property you're setting 

Understanding your product position can make the difference between reach- 
ing your prospect and not, between motivating interest and action and not, 
and between making a sale and not. 

In real estate, price is the cornerstone of positioning. In my experience, 85 
percent of your marketing strategy is set during the listing presentation when 
you and the seller agree on the right price and, therefore, the right market 
position for their home. 

After you've worked with a seller to agree on the right listing price, your mar- 
keting strategy unfolds naturally following these steps: 

v* Creating a description of the home's likely buyer 

*«" Listing the home's benefits and the reasons why likely buyers won't 
want to let the home go to anyone else 

*«* Selecting media channels or communications approaches that are most 
apt to get your marketing message in front of your target audience of 
likely buyers 

Chapter 12: Marketing Yourself and Your Properties Online and in Print ££j 

Using positioning to your competitive 
sales advantage 

Take time to look inside some of the other 
homes that compete for the same product posi- 
tion as your listing in terms of price and location. 
See how their features and benefits compare. 
Especially when handling ad and sign calls, 
this comparative information will be valuable in 
two ways: 

u* By expressing with certainty your listing's 
benefits compared to the benefits of other 

available properties, you'll convince callers 
that they must see and consider the home. 

By offering information on other homes in 
addition to the one you've listed, you'll 
increase the odds of converting callers into 
buyer clients by establishing yourself as a 
skilled agent and valuable home-buying 

Knowing your product position and the nature of your likely buyer puts you 
in a better position to select the right media vehicles to carry your message 
to your market. Consider the following generalities in your planning: 

W If you're marketing a lower-end home in your marketplace, many of 
your prospects may not be technologically savvy. With limited resources, 
they probably haven't invested in computers or included Internet con- 
nections to their monthly budgets. Therefore, you probably won't want 
to weight your marketing efforts toward online ads that your prospects 
may never encounter. You'd be better off placing ads in penny-saver or 
nickel-ad publications that are readily available for free pickup. One seg- 
ment of these buyers that is tech savvy is the first-time homebuyer cate- 
gory. Young professionals can also fit into this category. You may often 
find them stretching out of this bracket into the next or at least to the 
upper end of the bracket. 

*<* If you're marketing a home in the mid-price range, you can be fairly 
confident that your prospects are searching for properties online. 

Studies show that 80 percent to 90 percent of middle-income home shop- 
pers have Internet access and that most make the Internet their home- 
shopping starting point. To reach this audience, an effective Internet 
marketing strategy is essential. See the upcoming section, "Spreading 
the Word Online," for more details on Internet marketing strategies. 

*<* If you're marketing a high-priced home, one-to-one communications 
may be the most effective tactic. Especially with one-of-a-kind, top-priced 
properties, you may find that mailing a high-quality brochure to care- 
fully selected prospects nets the greatest success. Likely buyers for a 
property in this market position are likely too busy to spend hours on 
the Internet or poring through print ads. 


Part III: Developing a Winning Sales Strategy 


Product positioning only works if the home you're selling is priced appropri- 
ately. If you give in to a seller's desire to set an unreasonably high listing 
price, your marketing task will be vastly more difficult because 

u* You'll be forced to market to the wrong audience. In order to reach 
buyers who can afford the price the seller is asking, you'll be talking to 
people seeking a higher-level home than the property you're offering. 

*«* Your product will lose in competitive comparisons. It won't take long 
for buyers to realize that the home you're offering is inferior to others 
they can buy with the same amount of money. 

When you list an overpriced property, you have only two hopes for success: 
that the marketplace will heat up dramatically and lead to escalating prices, 
which brings your listing price in line with others, or that your seller will 
agree to a rapid price reduction. 


Positioning yourself 

Contrary to the opinions of consumers and a good many agents, not all 
agents offer the same or even similar services. It's safe to say that all agents 
work to bring real estate transactions to successful closings, but from there 
the differences in approach, style, and effectiveness vary wildly. 

As the owner of a real estate business, you must help prospects and clients 
realize the unique and beneficial position you hold in the marketplace. 
People need to know clearly why they should hire you. Chapter 14 is full of 
information that helps you define and claim your market position. As you 
communicate your position through your marketing efforts, remember these 
three points: 

**" Tell and remind people that you're in the real estate business. After 
your business achieves a high level of success, people will contact you 
based on your reputation. As a newer agent, however, you must notify 
everyone you know that you're in real estate sales, and then you must 
keep reminding them at regular intervals. 

t-" Say and prove that you're good at what you do. In a service business 
where all choices cost basically the same amount of money, as is the 
case in real estate sales, agents must differentiate themselves based on 
the expertise and service quality they provide. Client success stories, 
references from past clients, presentation of statistical advantages, 
results of satisfaction surveys, and glowing testimonials break you free 
from the crowd. 

is* Remind consumers that their choice of agent matters. Agents need to 
band together to get this message into the minds of all real estate buyers 
and sellers. Agents as a whole in the real estate industry haven't con- 
vinced clients that the right agent makes a difference in terms of down 

Chapter 12: Marketing Yourself and Your Properties Online and in Print 22 / 

payment, sales price, purchase price, net equity at closing, ease of trans- 
action, level of satisfaction, after-sale service, and countless other bene- 
fits. Make it your job to convey to the public that the right agent makes 
a difference, and that you're the best agent to make a difference in 
their deal. 

Creating and Placing High-Impact Ads 

Successful real estate advertising is the result of doing three things right: 

V Creating ads that grab your target prospects' attention 

*<* Saying the right things to generate interest, prompt responses, and 

I move the prospect closer to the buying decision 
f" Placing your ads in publications that reach your target prospects 

These techniques work well with both print and online ad strategies. Read on 
for advice. 


The power of a great headline 

Great marketing materials start with great headlines. Whether you're creating 
a print ad, a property flyer, a Web page, or a brochure, the headline that 
sits above your copy can make or break your communication effort, and 
here's why: 

u* Four out of five people read nothing but the headline. 

W Only the most compelling headlines tempt readers to discover more by 
reading further down into your ad copy. 

«-" You can write amazing ad copy, but if your headline is weak, 80 percent 
of people will pass right over your ad. 

The objective of a headline is to be provocative and to get the reader to pick 
up the phone. Here are a few examples of powerful headlines: 

W. My Pain Is YOUR Gain!!! 

!!! No Bank Qualifying, Easy Financing, Owner Will Carry with possible Rent- 

??? TIRED Of Trying To Sell Your Home Yourself??? How about making the 
problem go away in 24 hours or LESS? Call Dirk To End Your Frustrations 
NOW!!! 555-1212. 

228 P art '" : Developing a Winning Sales Strategy 

Some of you may be asking why I'm using so much punctuation in improper 
places. If I was writing an English paper, this improper punctuation would be 
a problem, but in real estate ads, it's not. The first call I got when I published 
these ads was from my mother who is a former English teacher. She was not 
happy with her son publicly demonstrating such poor English composition. I 
explained to her the purpose of the punctuation overkill was twofold. 

Excessive punctuation is important because ads placed in newspapers or on 
the Internet are usually set up alphabetically by headline. If you start your 
headline with "Zillion Dollar Value," your ad will most likely be the last one. If 
you start your ad with a headline such as "Al-Class Home," your ad will be 
one of the first. However, if you start it with punctuation you're almost guar- 
anteed the first spot in that section. Your ads are more likely to get read and 
achieve a higher response rate when they're at the beginning of the section 
rather than at the end. 

By using extra punctuation, you also cause the reader to pause and linger on 
the sentence. Many direct response studies have concluded that these types 
of ad headlines create high response rates from readers. 

Writing high-impact advertising copy 

The body of the ad, called ad copy, is the descriptive part of the ad. When 
preparing copy you want to remember a few essential points. Read on for 

Engaging the reader's imagination 

Let readers imagine what it would be like to live in the home. For example, 
instead of factually stating that a home has a patio and large backyard, say 
that the large back-yard includes a spacious patio designed for perfect 
summer evenings. Or, suggest that owners can "BBQ on the spacious patio 
while watching the kids play in the enormous backyard." 

In newspaper ads, where you're paying by the word or inch, you need to limit 
the number of words you use. However, you can still pick one powerful fea- 
ture to describe in terms that evoke a compelling owner experience. 

Emphasizing benefits Versus features 

A large kitchen, a spacious backyard, a three-car garage, and air conditioning 
are all descriptions of a home's features. Not one of these descriptions tells 
buyers what's in it for them. Not one conveys a benefit that the buyer 
gets from the feature. However, these terms fill most real estate marketing 

Chapter 12: Marketing Yourself and Your Properties Online and in Print ££y 

Add impact to your ads by converting features to benefits by following these 

v* Instead of simply announcing the feature of a three-car garage, advertise 
a three-bay garage with abundant storage space. Note in the ad that this 
feature makes a rental storage unit (with the accompanying $750 annual 
fee) a thing of the past and provides a workshop where the owner can 
fix kids' bikes and perfect shop skills. 

V Translate the feature of air conditioning into the benefits of comfort, 
coolness, and the restful feeling that results from a good night's sleep in 
an air-conditioned home. 


Calling for action . . . novil 

What distinguishes great marketers from good marketers is the ability to 
build a sense of urgency and to prompt prospects to take immediate action. 
Every time you create an ad, give readers a reason to take action and provide 
instructions on how to take the next step. 

Describe the exclusive nature of a property and say that this type of unique 
home rarely comes onto the market and that when it does, it generally moves 
quickly. Make sure you prompt prospects to call for an appointment. 

You can use low inventory levels or rising interest rates to urge quick action 
and phone calls. Even a simple closing line that reads, "Don't delay, call right 
away" can spur more action than an ad that ends without a similar instruction. 


Staying legal 

When they're marketing properties, agents can run into trouble by using 
terms or descriptive language that violates the Federal Fair Housing Laws 
that govern the sale or rental of properties to individuals. These laws fall 
under the jurisdiction of HUD, the U.S. Department of Housing and Urban 
Development, which is very serious about the ethical and honest treatment 
of all real estate consumers. 

The fair housing anti-discrimination stance applies to all public communica- 
tions, including advertising. All of the text on Web sites, in newspaper and maga- 
zine ads, on flyers, or in other printed materials must adhere to HUD guidelines. 

Following are a few words and phrases, which are used in everyday conversa- 
tions and are considered normal real estate jargon, that can't be used in print 
advertising. The moment these terms appear in printed marketing materials, 
the ad is in violation of federal law: 

IV Able-bodied 
v* Adult community 

2j(/ P ar t '" : Developing a Winning Sales Strategy 


is* Adult living 

V Bachelor pad 

*-" Churches nearby 

«-" Couple 

W Couples only 

v* Empty nesters 

**" Any ethnic references 

U* Families 

i* Newlyweds 

v* Traditional neighborhood 

Ask your broker or your newspaper-advertising representative for a list of the 
prohibited words. Many newspaper reps are in tune with the housing laws 
and will correct your ads to make them comply However, when in doubt, the 
safest advice is to restrict ad copy to a description of the property for sale 
while steering far clear of any descriptions of the type of person or people 
that you or the sellers think would be good buyers or occupants. 

Discrimination in housing because of race or color, national origin, religion, 
sex, family status, or handicap is illegal for both real estate agents and sellers 
and carries stiff penalties and fines. If you think that a seller is discriminating, 
run, don't walk, away. For complete information, visit the Fair Housing Web 
site at www. f airhousinglaw. org/. 


Choosing the right media outlets 

You can create the most extraordinary ad possible, but if it reaches the eyes 
or ears of people who aren't interested in or capable of buying your offering, 
your efforts are wasted. That's why media selection is so essential to effec- 
tive real estate marketing. 

For example, suppose that you have a listing for a home that has specially built 
wheelchair access, an elevator, and is on a golf course. You'll find very few 
people out there who are golfers, who have the need for wheelchair accessibil- 
ity, and who have the assets required to buy a home with an elevator. If you 
place your ad in a publication that predominantly reaches 20-somethings who 
are starting new families, you can bank on little to no response to your efforts. 

On the other hand, if you place your advertisement in golf publications, or if 
the golf course is private and you advertise in the monthly newsletter or send 
direct mailers to the membership list, your marketing messages immediately 

Chapter 12: Marketing Yourself and Your Properties Online and in Print £j / 

reach the prospects in your target audience. Even better, if you were to dis- 
cover a magazine with a good many handicapped golfers among its sub- 
scribers, you could safely bet your advertising dollars on the publication to 
serve as an ideal vehicle for sharing the targeted benefits of your listed prop- 
erty with the perfect target audience for this home. 

The key to effective media placements is to know the following: 

*<* The profile of the target prospect you're trying to reach, including the 
prospect's geographic location, demographic facts (which includes age, 
gender, ethnicity, income level, education level, marital status, house- 
hold size, and other facts), and lifestyle characteristics, which includes 
personal interests and activities, behavioral patterns, and beliefs. 

i^ How well the media vehicle you're considering reaches your target 
audience. If you're targeting families that have young children and have 
income levels of $75,000 or more, ask the media representative what per- 
centage of the publication's audience matches that description. The 
answer can help you determine whether an ad in that publication would 
be effective. 

Converting ad interest to action 

Your ads need to include a response mechanism, which is a fancy way of 
saying that you need to tell people what to do next and how to do it. Every 
single communication — whether through an ad, a mailer, a Web site visit, an 
open house, or any other outreach effort — needs to include a call to action 
that motivates prospects to take the next step. One call to action is having 
prospects provide you with an e-mail address, a home or work mailing 
address, a phone number, or some other way that you can be in contact. 

To generate responses and harvest prospect information, consider the fol- 
lowing ideas: 

u* Invite ad respondents to call or go online to request free reports on 

such attention-getting topics as "Ten Mistakes Sellers Make When Selling 
a Home" or "Ten Tips for Buying Property under Market Value." You'll 
gain names and mailing addresses as a result. 

w* Use call capture technology to harvest information on prospects who 

request information about properties you've listed or are featuring in 
your marketing. Call capture allows you to promote a toll-free number 
that prospects can call for prerecorded information on a property. When 
they do, the technology grabs the caller's phone number and sends it to 
you within minutes so that you can call them back. It's truly a brilliant 
innovation for lead generation. For more information, visit the www. 
callcapturesuccess . com. 

^3^ ' >art '"■ D eve l°pi n 9 a Winning Sales Strategy 

Promoting Properties by Using Flyers 

Agents have made promotional flyers a marketing staple for years and years, 
and their use is still valid today. What has changed over the years is the way 
flyers are designed and produced. 


Today, instead of using flyers simply to promote listings, agents use flyers to 
promote their personal brands. In addition to presenting information on the 
home being promoted, agents prominently present their own brand images — 
in the form of logos, pictures, slogans or taglines, and contact information. 
Most importantly, they include their Web site addresses in an effort to use 
property flyers as a mechanism to drive traffic to agent sites. 

Creating outside*the*home flyers 

When creating flyers that sit in yard boxes outside of homes for sale, follow 
this advice: 

v Include property basics, such as age of the home, square footage, 

number of bedrooms and bathrooms, and a few amenities that make the 
home special. 

«-" List a few amenities that make the home special, but don't divulge all the 
details. Remember, the purpose of the flyer is to entice prospects to call 
you for a showing appointment. You want your phone to ring. However, 
the more information you share, the greater the chance that prospects 
will cross the home off their consideration list before they ever call you 
to get inside. 

is* Include the address of the property and a picture of the home's exterior. 
This way, when the prospects get home after looking at a half dozen or 
so properties they can keep your listing straight from the others they 
may be considering. 

*«* Include your contact information, company information, Web and e-mail 
addresses, and a picture of yourself to advance your brand and drive 
traffic to your business. 

*<* You may also consider including the listing's MLS number. If prospects 
are working with an agent, their agent won't have to call you and waste 
your time to provide information that is available on the MLS. 

v* Consider using the back of the flyer to present one paragraph each on 
five or six other properties listed by you or others in your office that are 
similar to the home featured on the flyer front. These profiles won't be 
as extensive or descriptive as the information presented on the featured 
home, but they'll give prospects a lineup of additional reasons to call you 
for additional information. Your objective is to increase the odds of receiv- 
ing a call or a number of calls for each flyer that goes out of your flyer box. 

Chapter 12: Marketing Yourself and Your Properties Online and in Print £jj 

What about including the price? 

Whether or notto include the listing price on the 
yard box flyer is an issue that raises a heated 
debate in the agent community. The agents who 
advocate including the dollar figure say that if 
you don't include the price, you'll upset some 
prospects by providing everything but the 
numbertheymostwantto know. However, you'll 
receive more calls, and the chance to develop 

more leads, if you leave the price off the flyer. 
You're in the business of selling real estate. If 
you state the price and it causes prospects to 
cross the home off their list without ever calling 
you for more information, you won't have a 
chance to sell anything. Neither you nor your 
seller will benefit if prospects take a flyer and 
never call you. 


Creating inside-the-home flyers 

The flyers that you hand out inside the home at open houses or home tours 
are similar to the outdoor flyer with these variations: 

**" Inside-the-home flyers include a full description of the home's amenities 
rather than a partial list of amenity highlights. 

is* Include more photos so that following the home tour prospects can 
recall their favorite features. 

I v* Feature the price. 

Most buyers tour a number of homes in a short period of time. The purpose 
of the indoor flyer is to provide complete information that jogs memories 
after prospects leave a showing. 

Design and production tips 

Creating flyers from scratch each time you have a listing is far too consuming 
of an agent's time. To save hours while also creating better materials, use 
flyer templates to speed up the process. You can use ready-made templates 
that are available for use by real estate professionals, or you can create your 
own personalized templates to use over and over again. 

Available software resources for easy-to-personalize home flyers include 
ProFlyers, Real Estate Marketing Flyers, and ProForce Software, all currently 
available at prices under $130. 

Many real estate-specific customer relationship management, or CRM pro- 
grams, such as Instant Impact Gold, TOP PRODUCER, and AgentOffice, 
include templates to create customized flyers as part of their software 
packages. So, before buying new programs, check to see what functions are 
included in the software you already own. 

2jQ P art '" : Developing a Winning Sales Strategy 

Spreading the Word Online 


Over the past decade, the Internet has revolutionized real estate marketing 
approaches. Ten years ago the primary mechanism for advertising properties 
was the local newspaper. Not so today. Over recent years, the newspaper's 
classified section has shrunk dramatically while the number of agent Web 
sites has exploded, and for good reason. Agents are going where their 
prospects are, and their prospects are online. 

Today, with more than 80 percent of consumers using the Internet to view 
properties, presence, prominence, and promotion on the Web are essential to 
your success. The upcoming sections help you to develop online presence 
and devise an online strategy that accomplishes three aims: brand building, 
information distribution, and lead generation. 

Types of agent Web sites 

You can create a single site that aims to build your brand, distribute listing 
information, and generate leads, but the most successful sites are targeted to 
specific audiences and interests, as described in the upcoming sections. 

Brand-building sites 

The aim of brand-building sites is to enhance your credibility and stature in 
the marketplace. They feature information about your success in the busi- 
ness by showing the number of units you've sold, the number of years of 
experience you have, the designations you've achieved, and the awards 
you've received. They also feature testimonials from past clients who have 
worked with you. 

Information-distribution sites 

Information-distribution sites present information about neighborhoods, 
schools, housing areas, and specific properties. Consumers visit information- 
distribution sites to find out about the houses for sale in their area. For that 
reason, the sites need to include search functions that are easy for consumers 
to use. To increase your success, information-distribution sites should also 
include at least a minimal level of lead-harvesting ability. As an agent, you 
want to be able to get your prospects' contact information so that you can 
provide service follow-up. 

When it comes to the topic of lead generating and lead harvesting, agents split 
into two schools of thought. Some advocate setting a low barrier of entry to 
an information-distribution site — which means a user has to input only a 

Chapter 12: Marketing Yourself and Your Properties Online and in Print 2j3 

little information before entering the site. Setting a low barrier of entry encour- 
ages the greatest number of people possible to enter the site. On the other 
hand, some agents prefer to set the entry bar higher, requiring a greater 
amount of information, including name, address, and phone number, so that 
the prospects who gain access to information also enter the agent's prospect 
information base. 

I personally prefer the higher barrier of entry approach. Opponents to this 
approach are right that it delivers fewer leads, but the leads you gather are of 
higher quality. Plus, you'll collect complete prospect information, enabling 
you to stream site visitors into your usual sales channel. By requiring your 
site visitor's name and phone number, you'll gather the information you need 
to follow-up with a phone call and seek an appointment. The alternative is to 
obtain only an e-mail address. However, building connection, urgency, and a 
call to action in the text of an e-mail is much more difficult than it is through 
a personal phone call. 

Lead-generation sites 

Lead-generation sites attract prospects through links, banner ads, and offers 
of free reports and articles that appear on other Web sites. 

If you're a newer agent with limited cash resources, or if you lack polished tech- 
nological skills, build your lead-generation site using an existing site template 
instead of trying to design and create a custom-designed site. Most templates 
include areas for your personalized copy and content and opportunities to cus- 
tomize the look so your site won't look like a carbon copy of another agent's. 


Attributes of a good site 

One site attribute overshadows all others: accessibility. Your site must be 
easy to use. Many agents mistakenly create sites that are pretty but not 

Before you commit to a site template or design, make sure it can achieve the 
following standards: 

W The information is clearly presented and well-organized so that visitors 
can quickly find and get to site sections and content. 

u* The site loads quickly. No one wants to wait 30 seconds for a site to 
load. Your site should load within a few seconds. 

u* The site is easy to navigate so that users can move from section to sec- 
tion without confusion. 

2j0 P art '" : Developing a Winning Sales Strategy 

U* The site gives you the opportunity to categorize prospects into buyer 
and seller groups, and possibly by price point as well. After your site is 
online, you want to quickly lead users to the information they seek, and 
you want to know the nature of the visitor you're serving. 

v* The focus of the site is on the properties you offer. Online real estate 
shoppers are looking for homes, and your site needs to give them what 
they want or they'll bail out in a matter of seconds. The show is not 
about you, but instead about the homes you represent and about the 
homes you can access through the MLS. Anything that takes the focus 
away from the properties is a costly distraction. 

More than anything else, you want your Web site to create and harvest leads. 
To enhance user responses, consider making an offer of value, perhaps in the 
form free reports for buyers and sellers. Don't create a Web site that is only a 
glorified electronic business card. If you do, you won't get the results you're 
hoping for. 

Creating domain names 

Your domain name is the key that drives traffic to your site. If you don't already 
have a domain name, follow these steps to get one — or several — as quickly 
as possible: 

*«* The first domain name you need to register is your own name, as in 
www . yourname . com/ . I recommend that you go to www . godaddy .com/ 
to determine whether your name is available, and then register it as 
your domain name. The site is an easy and cost-effective resource, cur- 
rently charging only $8.95 a year for your domain name and a lineup of 
other complimentary services. 

W Consider registering a number of additional domain names that all lead 
to your Web site through a function called URL forwarding, which redi- 
rects multiple Web address to one site. You could have 100 URLs that 
forward to just one site. At $8.95 per year, cost shouldn't be a deterrent. 

In addition to your original domain name, you can create some names 
that describe your service area. For instance, you may want to register a 
domain name that features your hometown name followed by the words 
real estate or homes for sale, following these examples: 

www.anywhereusarealestate . com/ 

www. anywhereusahomesf orsale . com/ 

Or, you can put your own name in front of your hometown name, follow- 
ing this example: 

www. dirksellsbend. com/ 

Chapter 12: Marketing Yourself and Your Properties Online and in Print £j / 

v* You can even register domain names that feature the names of specific 
real estate areas or neighborhoods in your market. For example, if you 
specialize in a hypothetical region called Perfectville, you may register: 

www. per f ectvillehomesf or sale . com/ 

www.movetoperf ectville . com/ 

www. per f ectvillesubdivision . com/ 

When you use a multiple domain name strategy, you invest in a single Web 
site that carries your primary domain name and then use a number of names 
to get people to your Web space. 

When online real estate shoppers enter the name of your hometown or the 
name of a special neighborhood in your hometown, chances are good that 
one of your domain names will appear in their search results. 

Driving traffic to your site 

Unfortunately online, you can't rely on the old saying, "Build it and they will 
come." You need to drive people to your site by doing the following: 

W Feature your Web address on every mailer, ad, flyer, or promotional 
piece you send into the marketplace. You may even consider adding 
your Web address to your yard signs. 

w* Put search engines to work. Search engine optimization is a complex 
field that usually requires professional assistance. Most agents don't 
understand the language and strategy required to move their sites up 
high in online search results. Luckily, a whole industry of technology 
propeller heads does. Before hiring anyone, check out the abilities of the 
person you're considering. Ask to see hard data regarding the results 
she has achieved for other clients, including ranking stats, page views, 
and lead generation numbers. 

If the person you're interviewing reports success rates by citing the 
number of hits, beware. Often people refer to hits when they don't have 
positive results in the other areas or when they haven't tracked the 
results. You only want to pay for results you can measure. 

Converting lookers to leads 

Site visitors are known as eyeballs. The aim of your online strategy is to con- 
vert eyeballs to leads by creating and promoting a clear path they can follow 
from your Web page to your business. 

2jO P art '" : Developing a Winning Sales Strategy 

You'll never turn every online visitor to a lead, but you can increase your con- 
version rate dramatically by presenting an effective call to action. These calls 
to action can be in the form of a specific request for a free report, an offer to 
request additional property information, or an invitation to fill out a survey. 

After you present these calls to action, track the number of lookers you con- 
vert to leads. For example, if a thousand users visit your site and 150 request 
a free brochure titled "How to buy property in our market for 70 cents on the 
dollar," your conversion rate is 15 percent. Not bad! 

Converting leads to clients 

After you capture a lead, you need to go into full court press to convert the 
name and contact information into a prospect for your business. For some 
reason, agents don't follow up with Internet leads as aggressively as they do 
with ad call or sign call leads. I consider this a mistake because in today's 
world you stand to generate more leads online than from any other source. 

To get a feel for the way online leads accrue to build your business, look at 
this follow-up to the example in the preceding section: 

is* If your site draws 1,000 visitors and 150 of those visitors request your 
free report, you'll have a 15 percent visitor-to-lead conversion ratio. 

«-" If you convert 5 percent of the resulting 150 leads to buyer-consultation 
interviews, you'll generate 7.5 interviews from the 1,000 site visitors, or 
a .75 percent site visitor-to-interview conversion rate. 

w* Based on your online conversion rates, you'll have a base from which to 
work with as you adjust your marketing and conversion strategy. For 
instance, if you want to generate 15 instead of 7.5 interviews, you'll have 
to either double the number of visitors to your site or double your con- 
version rate. It all boils down to the numbers. 

To improve your Web marketing, visit other agents' sites to see how they build, 
use, market, promote, and track responses. Most importantly, observe how the 
other agents prompt calls to action. You may even register and request a few 
offered items to see how they follow-up on leads. Most use automatic respon- 
ders, which send out messages via e-mail without the touch of a human hand, 
so they won't even know that you, a competing agent, got their stuff. 

Using attracts more home buyer and home seller visits than any other 
Web site. Owned by the National Association of Realtors, this site helps 

Chapter 12: Marketing Yourself and Your Properties Online and in Print £j y 

member agents promote their offerings to the public. As a first step, visit 
www. realtor . com/ to explore the different packages and features available. 
Then make sure to post all of your listings, along with multiple pictures, on 
the site. 

Amazingly, at times, fewer than half of the site's listings feature even a single 
picture. What a mistake, especially given the fact that most consumers imme- 
diately abandon interest in properties if they can't see at least one picture. 

To further increase exposure for your listings, you may even want to include 
a link to a virtual tour. See the upcoming section, "Enhancing Exposure via 
Virtual Tours" to get how-to advice. 


Putting your agency's Web site to Work 

As a newer agent, you may not be able to afford an elaborate site of your 
own. Here's where your company's site can come to your short-term rescue. 
Eventually you have to build your own site, but in the meantime, a page on 
your company's site, with an address such as, www.bananarealestate . com/ 
dirkzeller, can at least give you online presence. 

Whether it's your only online space or whether it's in addition to your own site, 
be sure to create an agent page on your company Web site. Include your pic- 
ture, qualifications, education, designations (if you have any), and degrees. You 
may also want to include a personal mission statement or series of service- 
based beliefs for prospects to view. Additionally, feature listed properties, 
along with as many photos as possible. 

Enhancing Exposure </ia Virtual Tours 

The term virtual tour applies to either a video presentation or a series of digi- 
tal pictures "stitched" together to create a 360 degree panoramic view of the 
living space of a home. 

With a virtual tour, a prospect in Nome, Alaska, can go online to experience 
the feeling of being inside a home in Palm Desert, California. 

When the idea of virtual tours was introduced about a decade or so ago, it 
was billed as the home-buying approach of the future. Technology forecast- 
ers said that prospects would use virtual tour capabilities to view their 
selected home and that they would then simply click to make the purchase. 
Obviously, the sales predictions were wildly off course, but the popularity of 
virtual tours as a marketing device took off nonetheless. 

2u P art '" : Developing a Winning Sales Strategy 


At a time when consumers are demanding more information, more pictures, 
and a greater ease of access, virtual tours are the fastest-growing innovation 
in real estate marketing. Studies of online home shoppers show that homes 
accompanied by virtual tours receive more hits, higher page views, and 
longer view times per page than homes featured in only a few grainy pictures. 
Virtual tours help your property get noticed. 

Be sure that your listing is ready to show and that it competes well in its 
competitive environment before posting a virtual tour or the tour can back- 
fire on you and drive interest away. If your listing pales in comparison to 
competitive offerings, you won't get anyone into the home. Flip to Chapter 11 
for advice on how to get a listing ready for showing. 


Producing a Virtual tour 

Whether your tour takes the form of video or stitched-together digital 
photos, my advice is "don't try this at home" unless you're willing to invest in 
some sophisticated equipment and training. Either way, consider this advice: 

v* Be prepared to invest some money. You can piece together provided 
photos for practically nothing, but to produce a true virtual tour with a 
360-degree visual presentation, you'll need to spend at least several hun- 
dred dollars per tour. 

*<* To create your own video tours, you need the right equipment. If you 

don't already have video equipment, you can buy a system for under 
$1,000. IPIX is the industry leader and is the provider of the equipment 
used by the majority of professional producers of 360-degree tours. 
Many smaller companies are just resellers of the IPIX equipment. 

After the virtual tour is completed, put it to work. Feature it online, show it in 
your CMA presentations, use it when working with out-of-area buyers, and 
include it in the portfolio you use to present yourself to prospects and FSBO 

Important questions to ask 

Some agents are quick to spend money, even if they don't have a plan or set 
of objectives in place. Along the same lines, if not approached properly, vir- 
tual tours can cause agents to spend hundreds of dollars, without much 
return, for each of their listings. Each time you produce a tour, begin by 
answering these questions: 

is* What is your objective for the tour? Will you use it to generate leads, 
close appointments, build your image as a real estate agent, or for some 
other purpose? 

Chapter 12: Marketing Yourself and Your Properties Online and in Print 21$ 7 

*«" Who is your target audience? Will the tour be shown primarily to low- 
end, mid-range, or high-end home buyers? The answer will help you 
match the presentation to audience expectations, and will help you 
arrive at your budget as well. 

*«* What type of tour do you want to produce? Choose either 360-degree 
video or digital photos. 

is* How much time and effort can you and your staff invest in producing 
and maintaining the tour? Be aware that to produce your own 360- 
degree video tours, you'll need at least one in-house camera expert and 
one person to upload, create, and maintain the tours. 

i^ Will you hire a professional company? If so, be prepared to interview 
firms and compare resources based on company costs, the caliber of 
solutions the company provides, the way its services match your needs 
and expectations, and how easy the employees are to work with. 


Mistakes to avoid 

The biggest mistake you can make is to try to create virtual tours on the cheap. 

If you attempt to create your own virtual tours, chances are good that they, 
and by association you, will look cheap. They'll look cheap to potential 
buyers, potential sellers, and potential leads and prospects who will see your 
work online from around the world. 

The quality of the production will be interpreted as an indication of the qual- 
ity of your character and your service. Aim high. 


Whether you're planning to do it yourself or planning to hire professionals, the 
resources available are practically countless. Recently, I searched for the term 
"Virtual Tour" with an online search engine and 2,800,000 hits popped up. 

Following are a few Web sites you may want to consider: 

u* (www. fly-inside. com): This site provides a free digital 
slide show with audio capability. It delivers a pretty nice, but basic prod- 
uct. However, this site doesn't have enough bells and whistles for use 
with million dollar homes. 

u* (www. imagemaker3 60 .com): This group produces 
the Cadillac of virtual tours. It provides every feature imaginable from 
360-degree viewing with enhanced audio to interactive floor plans, traffic 
analysis, open house features, and countless other options. This com- 
pany is top of the line in terms of price, as well. But, if money is not a 
worry for you, this Web site may be a good bet. 

2 IX 2 P art '" : Developing a Winning Sales Strategy 

l** ( You'll need your 
own equipment for this option, but it does offer a 360-degree solution. 

is* ( This company is probably the 
largest player in the virtual tour industry. For a reasonable upfront fee 
and monthly rate, this company produces a digital slide show with your 
photos "stitched" together to simulate a 360-degree view. 

Leading prospects to your Virtual torn 

To drive prospects to your virtual tour, use these promotional channels: 

u* When you produce outside-the-home flyers, include your Web address 
and virtual tour information. 

*«* Include a virtual tour link on the MLS. 

*«" Arrange links or connectors from other sites that attract visitors who 
match your target prospect profile. This approach is especially effective 
in hot resort market areas where visitors are looking for in-depth 
regional information. 

v* Feature the site address for your virtual tour in your print ads. Just be 
sure that your tour doesn't reveal the home address. Your aim is to gen- 
erate interest so that prospects call you for additional information and 
home access. 

V Use post cards as direct mailers to promote both the property and the 
virtual tour. Don't send a letter that may or may not be opened. Send a 
postcard that automatically makes an immediate visual impression. 

A Picture's Worth a Thousand Words 

Thank goodness for digital technology that allows you to e-mail pictures of 
homes to prospects far and wide with the simple click of a mouse. The right 
picture can heighten interest, prompt purchase decisions, and deliver thou- 
sands of dollars in commission income. For that reason, a digital camera and 
photography expertise are necessary in your business. 

Choosing your camera 

Select a digital camera for taking pictures inside and outside the homes 
you're representing. If you're on a tight budget, you can find a solid camera 
for around $200. Just be sure it includes the following features: 

Chapter 12: Marketing Yourself and Your Properties Online and in Print 2uj 

is* Point and shoot. Cameras with this function focus and adjust for available 
lighting. They're easy to use, and therefore you're likely to use them often. 

is* A reasonable number of mega pixels. Mega pixels determine photo res- 
olution, which is essentially image quality. The bad news is that the 
more mega pixels you get, the more money you'll spend. The good news 
is that you don't want to go overboard because with mega pixels, you 
can actually have too much of a good thing. They use storage space in 
your camera and in your computer. They also result in larger files that 
take longer to e-mail. A camera with 3.1 mega pixels is enough to get the 
job done well. 

v* Easy transfer and storage capability. Select a camera with an easy-to- 
use memory card that you can insert into your computer, or select a 
model that connects via a USB cable so that you can easily transfer your 
images to your computer. 


Taking digital photos 

The key to success in taking digital pictures is to take a lot of them. With digi- 
tal cameras you're not spending money on film and development, so each 
photo is basically free. When you're at a property, snap freely. You can always 
edit, resize, crop, rotate, and enhance your photos with special effects when 
you're back at your computer. 


Capturing the best images 

For exterior photos: 

*«* Photograph when natural light is abundant. If you live in a climate with 
long, dreary winters, you may have to take a first round of photos on a 
gray day just to capture an image to use when you announce the listing. 
Plan to go back on a brighter day (as soon as possible) to take a second 
shot that will replace the original one. 

*<* Position yourself so that the sun is directly behind, or at an angle 
behind, your back. Otherwise your photo will have a glare that you may 
have to remove during editing. 

For interior photos: 

w* Create shots that give the illusion of spaciousness. Do so by incorpo- 
rating transitional areas, such as hallways or entryways, in with rooms 
in the same photo. 

v* Take lots and lots of shots. Don't edit on the spot or become paralyzed by 
second-guessing. Don't use the camera's viewing screen to evaluate the 
pictures at length. Capture as many images as possible, and then wait until 
you download them into your computer to analyze, cull, select, and edit. 

2u ii P art '" : Developing a Winning Sales Strategy 

Choosing the best shots 

The whole point of featuring photos is to entice prospects to come see the 
real thing. So, select and use only those images that convey comfort, warmth, 
and unique quality, and that are capable of evoking a "wow" response. 

If a photo shows a unique aspect of a bedroom, like an angled nook or archi- 
tecturally unique wall, use it. If the master bath — always a selling feature — 
is well beyond plain Jane in its look, show it. When selecting shots, choose 
quality over quantity. 

Creating and organizing photo fifes 

Set up a system so you can store and access the images you may need in the 
future. Following each photo shoot, first delete the pictures you don't want to 
use, and then store the rest. When storing your pictures, your camera auto- 
matically suggests a file name. Rename each picture by choosing a name that 
depicts the home or its address. Then move the images into folders that are 
labeled by property address. 

Chapter 13 

Negotiating the Contract 
and Closing the Deal 

In This Chapter 

Preparing your buyer or seller for the negotiations ahead 

Handling the negotiation process 

Forming an effective closing team to seal the deal 

J\Ji ost sellers think that an agent's real work involves finding the right 
/rl buyer, and most buyers think that the agent's real work involves find- 
ing the right house to buy. In fact, the real work involves bringing the deal to 
a successful close, and that's what this chapter is all about. 

The public doesn't see the hurdles an agent must overcome when reaching 
contract agreements and closing the transactions, but if that step goes awry, 
no other step in the real estate sales process matters. The process of negoti- 
ating a transaction involves fiduciary responsibility, market knowledge, client 
relations, honesty, disclosure, and enormous skill and tact. Sometimes suc- 
cess means your client is the one selected over other interested parties to 
buy a particular home. Sometimes success is a negotiated reduction in a 
home's sales price. Always it reflects the realities of the market and the best 
terms and conditions the buyer and seller can achieve. 

This chapter lays out the rules of negotiating, starting with knowing all about 
the market environment so you can convince your client to accept terms and 
conditions you believe are the best to be had at the present time, based on cur- 
rent market conditions. Often, you have to persuade a less-than-enthusiastic 
client who was hoping for a better outcome, so the following sections help you 
prepare for the task. 

2u P art '" : Developing a Winning Sales Strategy 

Informing Clients (and \loursetf) 
of What Happens Next 

At the listing presentation or buyer interview consultation, after the client 
commits to a buyer's agency agreement or listing agreement by signing either 
contract, take a few minutes to outline what happens next in the real estate 
sales process. Cover the following two points: 

u* Briefly describe how you'll work to represent your clients' interests 
when it comes to negotiating and closing their transaction. For example, 
I always used this final discussion to explain that my typical approach was 
to handle negotiations during an appointment in my office or, as an alter- 
native I would fax copies to each party prior to a phone meeting during 
which we would review the documents. I found these two approaches to 
be most convenient for my clients and most time-efficient for me and for 
them. By explaining my process in advance, my clients knew exactly 
what to expect. 

Some agents still travel to the client's home to present the offers and 
handle negotiations. I found it to be a large investment of time that was 
quite unnecessary. I couldn't have sold 150 homes a year and met all the 
clients in their homes to present offers. It would have also created more 
time away from family in the evenings — only to accomplish the task that 
could be handled well by fax during the course of a normal business day. 

*«* Advise your clients to expect most initial offers to come in below the 
asking price. I always told my clients that they should expect a below-list 
price offer and that I rarely saw a transaction that didn't require a coun- 
teroffer. This information adjusts expectations and averts disappointment. 


Your objective is to set the stage for the negotiations that lie ahead. 
Preparing your client for what's in store is an imperative final step that will 
save you time, energy, and even emotion in the future. 

Along with being truthful and realistic with clients, great real estate agents 
set an optimistic tone and create an expectation that all parties will work 
together to achieve a negotiated win/win outcome for both the seller and the 
buyer. In addition, the agents for both parties need to feel as though they've 
won as well, not just in terms of commissions earned but also in terms of feel- 
ing that they've earned the satisfaction of their clients. 

An unbalanced marketplace makes it harder for all parties to feel as if they've 
won. In recent years, most of North America experienced an unbalanced real 
estate environment; the inflated seller's marketplace left buyers feeling that 
they were at a disadvantage in sales transactions. They had to act quickly, 
pay more than the asking price, and assume more risks, such as released 
earnest money, no inspections on the home, and no contingent sale offers. 

Chapter 13: Negotiating the Contract and Closing the Deal £lX / 

Fortunately, we're exiting that arena and entering back into an environment in 
which win/win outcomes are more possible and probable. 

One of your jobs throughout the transaction is to serve as a calming influ- 
ence. When emotions run high — as they're sure to do — be the one to 
remain focused on the outcome and to settle down the buyer, the seller, and 
all involved agents. Take the approach followed by the best emergency room 
doctors: They display confidence and skill while reassuring their patients and 
other medical staff that everything is under control. If an emergency room 
doctor flew into a frenzy, the entire clinical setting would likely spin out of 
control on the tide of unchecked emotion. The same is true in the final throes 
of a real estate transaction. Commit to serving as the calming influence 
throughout the deal. 

Keys to Representing a Seller 

Sellers have plenty of reason to be emotional during the final negotiation. 
They're undergoing changes, making huge decisions, and dealing with trans- 
actions that involve major (if not the most major) investments they own. 
Your role in this environment, and the key to your success, is twofold: Be pre- 
pared and protect the seller at every step along the way. 


Be prepared 

Careful preparations before you present a buyer's offer to your client can 
shorten the meeting, help you craft a better counteroffer, keep seller emotions 
in check, and focus your client's attention on the next important steps in the 
sales process. Prepare yourself for negotiations by following this advice: 

v* Remain calm no matter how high or low the offer starts. 

i^ Go through the buyer's offer carefully and note any key issues that 
need addressing. 

I rarely advise that the buyer's representative be present to deliver the 
news to the seller directly. In my experience, it only increases the time 
invested on my seller's part (and on my part). My seller could say some- 
thing that may weaken their position in negotiating with the buyer that 
the agent picks up on. 

*<* Flag any contract points that merit your seller's attention so you can 
easily reference them during the meeting. 

If you're faxing the document to your client, also summarize the key 
points on the fax cover sheet so that your seller doesn't have to dig 
through every line of the contract. 

£ll O P art '" : Developing a Winning Sales Strategy 

is* If your meeting will take place by phone rather in person, fax the 
offer to the seller within 15 to 30 minutes of your conversation. You 

don't want the seller to spend hours brooding if the price is low, and you 
certainly don't want him to call you with questions, concerns, and panic 
attacks six times prior to the scheduled phone conference. 

Protect the setter at alt times 


The worst thing that can happen to a seller is to have the transaction fall apart 
a few days before closing. By then, she's emotionally invested in another prop- 
erty. She's already made plans to move. She's excited about the future. And 
then, wham, everything falls apart, and everyone loses market time, marketing 
momentum, and a considerable investment of time and money. 

In the aftermath of this kind of disastrous situation, I've had the chance to 
look at the contracts that were written and have seen things that make me 
cringe. Ultimately, the agent didn't protect the client, and all parties paid 
dearly for the mistake in the end. 

Even the most thorough approach results in a broken deal once in a while. By 
taking the following precautions, however, you can do a better job of protect- 
ing your client and you can keep disasters to a bare minimum: 

is* Require the prospective buyer to deposit enough earnest money to 
secure your client's position. Set the earnest money high enough to 
make it difficult for the buyer to purchase another home if she walks 
away from the deal after all contingent conditions are satisfied. You may 
be thinking that this advice conflicts with your objective to achieve a 
win/win outcome, but in fact, it simply requires the buyer to uphold her 
end of the deal or sacrifice her deposit. 

Few buyers will walk from a deal when an amount like $5,000 is at stake. 
Yet many agents allow initial deposits of as low as $1,000 or $2,000 to 
squeak by. The rationale is that the buyer won't have the cash available 
to make a higher deposit; however, if she needs $15,000 to close in 30 
days, depositing $5,000 upfront won't kill her. 

Consider accepting part of the deposit in the form of a short-term note, 
but only do this if there's no other way to increase the earnest money. If 
the buyer really does have a problem with available cash, get a few thou- 
sand dollars deposited immediately and make arrangements to receive 
the balance within a few weeks, securing the latter portion with a note. 
Never secure the initial earnest money with a note for more than 24 
hours, and if you accept a note for additional earnest money, be sure it's 
redeemed within a stipulated short period of time. 

Don't accept notes redeemable at closing. If the closing never happens, 
your seller will never be able to redeem the note. It becomes a worthless 

Chapter 13: Negotiating the Contract and Closing the Deal 21$ y 

piece of paper because the transaction never closed and, technically, 
the note never came due. Even legal action can't fix this agent mishap. 

*<* Require the buyer to provide proof of loan approval with no conditions. 

You want proof-positive that the buyer can and will perform within two 
weeks of acceptance of the offer. Lending institutions are notorious for 
writing loan approval letters with conditions or clauses that protect both 
the institution and the buyer, so make it clear on the counteroffer that no 
contingencies or conditions are acceptable after two weeks. 

*«* Tighten the language of the deal every step of the way. Remember at all 
times that your job is to protect and secure the interests of your client, 
the seller. The broader the language you allow, the greater the number of 
interpretable clauses — commonly known as weasel clauses — that make 
it into the transaction, each one endangering the level of security you can 
provide your client. 

Keys to Representing a Buyer 


The buyer's agent is responsible for crafting, presenting, writing a proper 
contract for, and prompting acceptance of a good offer. In order to best repre- 
sent your client, the buyer, follow these recommendations: 

*<* Guide your client toward a competitive offer. Perform at least a quick 
competitive market analysis, or CMA, to determine the value of the prop- 
erty. (If you need help with this task, turn to Chapter 10.) Among the 
factors to weigh are the home's current value based on the value of com- 
parable properties, regional housing inventory levels, and the competi- 
tive nature of the current marketplace. Your findings help your client 
arrive at a reasonable price decision and help you to counsel him as he 
makes a competitive offer. 

u* After your client decides on a competitive offer, properly prepare the 
contract you will present on his behalf to the seller. Your goal must be 
to protect your client by writing terms and conditions that convey his 
intentions and meet his goals. Work with your client to understand all the 
terms and conditions that the contract covers and the language you use. 

For most people, a home purchase represents the largest investment 
they make, the biggest purchase in their lives, the greatest and longest- 
lasting debt they assume. The purchase agreement you write must pro- 
tect them by addressing every issue: the price being offered, the items 
to be included in the purchase price, the amount to be deposited, the 
closing date, the date the offer becomes null and void, and any condition 
that accompanies the offer, including contingencies based on the out- 
come of inspections, approval of financing, and personal property trans- 
ferring with the sale or other issues. 

230 P art '" : Developing a Winning Sales Strategy 

is* Present the offer and your buyer to the seller as the best in the mar- 
ketplace. Presenting the offer favorably to the seller can mean the differ- 
ence between your client or other bidders buying the house. The 
stronger you can position your buyer by presenting his financial capac- 
ity, superior commitment, motivation, and human connection, the more 
you swing the negotiation in favor of your client. 

For some sellers, a human connection is the tipping point in choosing 
one buyer over others. For example, an offer from a family the seller 
imagines will create cherished memories in the home may trump 
another offer that's missing the human connection, even if the former 
results in equal or even slightly less money. 

Partnering u/ith the Other Agent 

Whether you represent the seller or buyer, you and the other agent in your 
transaction are obligated to cooperate with each other; that's why you're 
called co-op brokers. At the same time, you're both obligated to represent the 
interests of your own clients, which works wonderfully when you both seek a 
win/win outcome but can be troublesome when the other agent comes to the 
deal with a we win/you lose mentality. 


Before talking with the other agent at length, I suggest you do some home- 
work. I always made it a point to find out in advance all I could about the 
agent I'd be dealing with. Unless I already knew the agent personally, my staff 
would conduct some research. They'd start at the MLS computer where 
they'd look at the number of listings and sales the agent had completed over 
the last few years. This information provided an indication of the agent's 
experience, which enabled me to better define my role in the negotiation. For 
example, if the other agent is experienced, successful, and skilled, I'd expect 
to share power equally. If the other agent was very new to the field, however, 
I knew I'd have to take the lead and guide the negotiation along. 

Become your own "other agent' 

The easiest other agentto work with is you. You 
know you. You know you want win/win out- 
comes. You know whether your listing has 
padding or your purchase offer has room for 
negotiation. You know how you work and that 
your skills are up to the task. And you probably 
know it's easier for you to work with you than 
with any other agent. 

Make your real estate sales life easier by selling 
more of your own listings. Represent both the 
buyer and the seller to avoid the challenges of 
working with another agent to complete the 

The biggest bonus of being both agents is that 
you don't have to split fees and earn more for 
the sale! 

Chapter 13: Negotiating the Contract and Closing the Deal £J / 

When you're ready to talk with the other agent, do the following: 

is* Explain your desire to create a win/win transaction. Tell the other 
agent that you're counting on him to create a win for both the buyer and 
seller and that you intend to do the same. Broaching this topic should 
help you identify an agent who believes his job is to achieve a win only 
for his own client. 

**" If you're the listing agent, let the other agent know that the home is 
competitively priced at fair market value with no padding in the 
asking price. If your client counters a low offer at full price or close to it, 
the response won't be a surprise to the agent or prospective buyers. 

*<* If you reach a snag, challenge, or impasse with the other agent or with 
the agent's client, test the situation by asking the agent one of these 

• "If you were representing my client, would you counsel him to 
accept this offer?" 

• "If you were in my shoes, would you want your client to accept 
these terms and conditions?" 

If the answer to either question is yes, ask "Why?" or "How would you sell 
this to my clients if you were in my shoes?" If the agent can't give you an 
answer, the silence lets you know that he knows his client's offer is unrea- 
sonable. If he can defend his position with cogent arguments, you know 
you must convince your client of the validity of the buyer's offer. 

Adtiancinq or Accepting an Offer 

When working on offers that represent the seller, you want to take control from 
the beginning. You want to dictate the time of meeting and the delivery method 
of the information (meeting in person or faxing the offer). It's also advisable to 
try and control the other agent in this process. Sometimes the other agent can 
get anxious, so informing her of the times frames of your meetings and when to 
expect a response will help her and her buyers remain calm. 

As a buyer's agent, you want to try to influence the presentation timeline of 
your offer, especially if the home is well-priced and in a competitive price range. 
The truth is that buyer's agents have little control in this process. The listing 
agent has all the power because they make the rules up as to when and where 
the offer presentation will be. I personally didn't like the lack of control, which 
was another reason that I worked exclusively with sellers for the better part of 
my career and had buyer's agents who worked with the buyers on my team. 


When representing sellers, I always requested that offers be faxed rather than 
personally presented to my clients by buyer's agents. I was one of the first 
agents in the country to take this approach nearly 15 years ago, and today 

£j£ Part III: Developing a Winning Sales Strategy 

it's commonplace. Receiving a buyer's offer by fax allows the agent and the 
seller time to consider the offer before responding to it. 

When representing buyers, I preferred to present the offer personally 
because I could clearly express my buyer's intentions rather than have them 
relayed through the seller's agent. By presenting personally, I also could 
gauge the seller's response by watching facial expressions. I could express 
my view of the property value. Also, I could share information about the 
prospective buyers in an effort to build the human connection that so often 
sways the sellers' acceptance decision. 

Presenting a buyer's tow offer 

When presenting an offer below the asking price, 

*«* Discuss the overall offer before revealing the price. First, work 

through and find common ground on the other stipulations in the offer. 
Then negotiate the price after you and the seller (or seller's agent) have 
agreed to or adjusted the other items that aren't related to price, such 
as time of possession, closing date, and any personal property included 
in the sale like the swing set or the washer and dryer. 

u* When discussing price, identify the difference between the asking and 
offered prices, and focus the discussion only on that number. Ask the 

seller, "If the buyer had come in here with cash and closing was in a 
couple of weeks, would the offer have been acceptable?" If they say that 
they would take $345,000 now, use the $345,000 number as your discus- 
sion price. Don't deal with the big numbers, like a $350,000 asking price 
and a $335,000 offer. Instead, break it down to a comparison between the 
$345,000 they would take now if a buyer walked in with cash and the 
$335,000 offer. The real difference is $10,000. Talk and plan in terms of a 
$10,000 difference between the seller and buyer. 

i^ Break the cost of the difference down to a daily rate. The effect of this 
technique is to reduce the difference to a ridiculously small amount. For 
example, suppose the difference is $10,000. Ask the seller to consider the 
actual impact of the difference; the majority of sellers end up as buyers, 
so what you're really asking him to consider is the cost of borrowing 
$10,000 more for his next house. In fact, the cost of that $10,000 is about 
$750 a year, or $62.50 a month, or $2.08 a day. With this information in 
hand, you can ask, "Is it worth $2.08 a day to know that your home is sold 
and that you have the freedom to move into your next home?" This same 
technique works well to raise the offer on the buyer's side or even to 
reach a midpoint agreement, in which each party can pay $1.04 a day, for 
example, to create a win/win outcome for the buyer and seller. 

u* Explain how the buyer arrived at her offer price. Show current comps to 
validate her thinking. The property may have been listed months ago, and 
in the meantime, the market environment may have changed considerably. 

Chapter 13: Negotiating the Contract and Closing the Deal 233 


Presenting a current market analysis can help justify and win acceptance 
of the offer. 

J-** If appropriate and true, explain that the buyer has another home in 
mind, saying, "She wanted to try to work with you first." 

**" If the offer is the highest the buyer can go, express that fact by saying, 
"The buyer would really love the home, but she understands if there's 
not an opportunity for a win for everyone." This kind of statement 
defuses emotions before they arise. 

Above all, when presenting a low price, convey that the offer is based on a 
realistic assessment of the market environment or the buyer's capability, not 
a personal reaction to the seller or the home. 

After you extend an offer below the asking price, be prepared to present off- 
setting benefits in an effort to make the offer attractive and valuable to the 
seller. Alternate redeeming qualities you can mention include: 

*<* Solid earnest money 

i^ Buyers with impeccable credit 

*<* Buyers with good, solid employment history 

f" Buyers with ample funds and a low loan-to-value ratio 

t-" Buyers with the flexibility to close quickly or wait as long as 90 days 

ReceMnq a buyer's tow offer 

If you did your job way back at the conclusion of the listing presentation (see 
Chapter 9), your seller should be well aware of the likelihood of a low offer. 
When one comes in, call the buyer's agent to discover more about the buyer. 
Ask whether she has the funds to close, whether she's selected a lending 
institution, and where she is in regards to securing a loan (if she's just start- 
ing and hasn't even met with a lender yet or if she has loan approval and is 
just working to find the right house). 

Your job is to explain this information to the seller so she clearly under- 
stands the risks of each buyer that makes an offer on a home. The risk can be 
the mitigating factor between two offers. A buyer who is preapproved and 
has a loan waiting may have a lower offer and still win the home due to the 
fact that the buyer already has preapproval (instead of just having talked 
with a lender). 

If the buyer has already initiated the loan process, ask the agent what loan 
amount she's been approved for. You may find out that the buyer can obtain 
a loan higher than the amount shown on the offer contract, which alerts you 
to the fact that she's qualified to pay more but is choosing not to. Your job 

25 U Part HI: Developing a Winning Sales Strategy 

then is to demonstrate that the home has a higher value than the price 
offered. On the other hand, if you find out that the buyer has been approved 
for exactly the loan amount listed on the contract, ask, "Is this the maximum 
she qualifies for?" 

If the buyer's agent can't provide the loan answers you need, present the 
same questions to the mortgage originators the buyer's working with. The 
"Working with a Closing Team" section later in this chapter gives advice for 
working with lending and other partners in the transaction. 

Taking the insult out of an insulting offer 

The first step toward taking the sting out of a low offer is assuring your client 
that the offer is financial, not personal. Most likely, the prospective buyer 
doesn't know your seller or your seller's family. The buyer may not even 
know the rationale behind the number presented, having relied on poor 
counsel, too much counsel, or an unskilled agent, in which case a well- 
presented counteroffer is in order. 

On the flip side, the seller's house may be overpriced, either because the 
seller insisted on a high price or because the market environment changed 
between when the home was listed and when the offer arrived. If a home is 
radically overpriced, a fair offer can look insulting when it really isn't. 

If your seller's home is overpriced, you must shift the focus to the gap between 
the low offer and fair market value, not the difference between fair market 
value and the inflated listing price. This calculation alone is likely to remove 
tens of thousands of dollars of "insult." If that doesn't work, ask the cooperat- 
ing agent to share the burden by explaining the rationale behind the offer. 

A good agent won't write an insulting offer. I was asked many times to write 
ridiculously low offers, and I consistently refused to represent those buyers on 
the equivalent of a fishing expedition. One client chastised me, saying I was 
required by law to write whatever she wanted to offer. I corrected her misinter- 
pretation of my responsibility. Agents are required by law in most states to pre- 
sent all offers they write, but nothing forces agents to write garbage that's 
embarrassing to present, wasteful of their time, and costly to their reputations. 

Getting beyond emotion 

People get emotional during the weeks leading up to a closing for a number 
of reasons. Money is at stake, both parties are anxious to get the deal done, 
and time is ticking away. Plus, home inspections and low-priced offers reveal 
opinions about a home's value that can feel jarring to a seller who has viewed 
the home with pride and joy for a number of years. 

Chapter 13: Negotiating the Contract and Closing the Deal 233 

The only antidote to an emotional uprising is a pragmatic focus on every- 
one's goals and a renewed commitment to find common ground and get the 
deal done. 


A few years ago, my father sold the family home I grew up in. My mother had 
died six months earlier, and he wanted to start a new life. Fortunately, I didn't 
represent him in the sale, but he did call to discuss an offer he'd received. We 
talked for 45 minutes one night while I was driving through mountain passes 
on my way to a speaking engagement in Vail, Colorado. (By the way, I would 
never talk with anyone but my dad for 45 minutes about a contract.) He was 
such a typical seller! His big issue was the sales price; I asked him the ques- 
tion I often pose to get to the core of what's affecting a sale negotiation: "Dad, 
is the reason you want this price for the house based on your ego, or do you 
really need the money?" The silence on the other end of the phone was my 
answer. Of course, I knew he didn't need the $20,000 he was so emotional 
about. From that point, he was able to find common ground with the buyer 
and get the home sold. 

When you hit a buyer-seller impasse, ask, "Is this about ego or income? Do 
you want the bragging rights that come with a high price, or do you need the 
money?" Usually, you bring your client back down to earth in a hurry. In 
essence, you're asking, "What are you really fighting for?" 

Turning concessions into Victories 

Buyer offers are usually accompanied by home inspection conditions that 
require the seller to make concessions before the deal is closed. Usually, 
these concessions take the form of repairs that the seller needs to make 
before the buyer takes possession. The presentation of repair concessions is 
one of the toughest steps in the negotiation process. Buyers often use the 
home inspection step to wring a bit more value out of their offers. Sellers, 
who feel they already gave at the office when they accepted the price offer, 
aren't in the mood to give more. 

No matter whether you're representing the buyer or seller, bring the focus 
down to the value of the requests. By itemizing the concessions and assign- 
ing value in terms of dollars, hassle, and time invested, you can maneuver a 
transaction to the end. Follow these recommendations: 

*«* Of the items on the list, select more than half of the easiest, least 
expensive issues to act upon. For example, if the list has ten items, pick 
six or seven of them. By dealing with more than half the requested 
items, you demonstrate your client's goodwill effort to meet the other 
party more than halfway. 

**" Call the other agent and say, "I doubt that I can be persuasive enough 
to get the seller to handle all your requests. If your client had to have 
a few of these concessions to keep the deal together, which ones would 

230 P art '" : Developing a Winning Sales Strategy 


they be?" This strategy enables you to know which requests represent 
potential deal-killers. 

is* Explain to the other agent that while you can't guarantee you'll get 
your seller to agree, you'll see what you can do. This lets the other 
agent know that you're working for the win/win for all. But remember, 
you're setting a low standard upfront and when you come back with 
more than half you can explain it as a victory for them. 

i^ Focus on what your client's gaining out of the deal. If your seller's 
pocketing a huge equity increase, focus on that fact. Urge her not to let 
$1,500 worth of repairs stand in the way of $300,000 cash in her pockets. 
If your buyer's moving to a terrific home in the perfect neighborhood for 
her family, focus on that. You may want to say something like this: 

"Mr. and Mrs. Buyer, we spent days and looked at over 40 homes to find 
this one that you described as perfect. Do you really want to start that 
process over again?" 

To turn concessions into victories, focus your clients on what they're gaining 
rather than on what they're giving up. 

Dealing With 1 Win/you lose clients 

Some clients, and some agents for that matter, only feel satisfied if they win 
and someone else loses. 


The best way to handle I win/you lose situations is to avoid them. If you 
can't, then deal with them professionally, powerfully, and from a position of 
control. No matter what, don't back down. Most I win/you lose clients are 
perpetually testing the water to see how much they can get away with. 

I once took on an expired listing for a seller I knew had an I win/you lose person- 
ality, but I thought I could overcome her tendencies. I got the price right and 
was confident I could sell and close quickly. What I didn't know was that I was 
dealing with what I call a "toxic client." I managed to sell her home to one of my 
own buyer clients in a reasonable time for full price and free rent back. She got a 
great deal. Then she called me three days before closing to inform me that she 
wouldn't close the transaction unless I cut my fee by $4,000. 1 informed her that 
I understood her request but wouldn't reduce my fee. I explained that she had 
the right to not sell but that I had the right to lien her property for my fee and 
potentially take legal action to collect. I also indicated that the buyer may take 
legal action to force her to complete the sale if she didn't close the deal in a few 
days. I told her, "As your agent, I would advise you to close the sale as sched- 
uled." Three days later, she did what I expected her to do. She closed. 

Chapter 13: Negotiating the Contract and Closing the Deal £J / 

Working vOith a Closing learn 

Most sellers and buyers think of the agreement as the tricky part of the trans- 
action and the closing as the part they can take pretty much for granted. 
Agents know otherwise. As an agent, your work isn't done and your payment 
teeters in the balance until you successfully complete this final, challenging 
part of the real estate transaction. 

The closing involves an army of people, and a good closing team can help 
you increase your prosperity by letting you efficiently wind up one deal so 
you to move on to the next. 

Work diligently during the weeks leading to the close to see that the loan, 
title work, and escrow or document preparation are handled by people on 
your own closing team. Make it your objective to direct the business to com- 
panies and individuals you know will perform in a timely, professional 
manner. Doing so assures your clients good service and fewer surprises and 
reduces the time you and your staff invest in closing the transaction. 

The following sections introduce the closing team lineup and advise how to 
work with everyone to make the closing a smooth process. 

The loan officer 

The loan officer holds a front-line position on your closing team. He or she 
secures the appraiser, verifies deposit of funds, verifies employment, and, 
ideally, completes the loan package for the buyer within a few days of con- 
tract acceptance. 

Make sure that the loan officer on your team is a great salesperson backed 
by a highly organized team that's able to push transactions through to a 
seamless close. A good loan officer can smooth out problems before you 
even hear about them, averting landmines and sparing you significant and 
time-consuming challenges. 

Loan officers can add considerable value to your business even beyond the 
sales closing. When you form a relationship with a loan officer, you can work 
in concert to land clients. You can follow up on leads together, or you can 
refer clients to each other; ultimately, you both win more business as a result 
of the relationship. 

23 O P art '" : Developing a Winning Sales Strategy 

The home inspector 

The home inspector is hired to evaluate the condition of the property, spot cur- 
rent or potential defects, and give guidance regarding the proper remedies. 

On your closing team, you want a home inspector who can quickly produce 
an easy-to-read report written in everyday language. If technical jargon is nec- 
essary, insist on plain-English translations. Nothing concerns buyers more 
than problems they don't understand. 

gj^NG/^ Work with home inspectors who are thorough and who fully disclose all defects 

and items in need of repair without throwing gasoline on potential problems. 
Beware the home inspector who's an alarmist, and instead look for someone 
who resembles Sergeant Joe Friday with his "just the facts, ma'am" approach. 

The appraiser 

Because lending institutions often have the largest stake in a home — greater 
even than that of borrowers — they hire appraisers to determine the value of 

Most lenders have relationships with a number of appraisers. Each appraiser 
follows a unique valuation approach and, as a result, each interprets the 
value of a home slightly differently. If you're working a deal and having trou- 
ble getting the property to appraise out at the sales price, ask your mortgage 
originator if another appraiser may be called upon. 

«jW NG -' Some appraisers have low-cost, limited-level memberships in the local MLS 

■^/ ^o^\ an d therefore don't receive lockbox keys. The membership saves them money 
but creates an inconvenience for agents on whom they have to rely for access 
to homes. Follow the once dumb-twice stupid rule: If you have to drive out to 
a home just to open a door for an appraiser or, worse yet, to stand around and 
wait until the job is done, make it a point to work with a different appraiser in 
the future! You'll find plenty of great appraisers that don't waste your time 
opening doors. 

The escrow closer 

An escrow closer is a neutral third party who coordinates the preparation and 
signing of documents, holds and distributes funds, and records the documents 
and deeds involved in a transaction. Some states are non-escrow states, which 
means the real estate company provides these services or, in some states, an 
attorney prepares all the legal documents. Check with your broker to clarify 
the standard operating procedure in your area. 

Chapter 13: Negotiating the Contract and Closing the Deal 25 y 

A good escrow officer keeps the transaction on track for an on-time closing. 
He or she also provides a second point of reassurance for your client by 
doing the following: 

*<" Staying in close communication with you and the client throughout the 
weeks leading up to closing 

j-** Sharing updates that confirm things are going well 

t-" Underscoring what a great agent you are and how lucky the client is to 
be working with you 

The escrow company can also be associated with the title company, which 
researches the home's previous owners and searches for liens and encum- 
brances on the property. Most lenders require title searches to ensure that 
titles are clear before they issue loans for properties. Lenders are in what's 
called first position, meaning that they take control if buyers default on loans. 

Atfoidinq bemitment 

Like a train, a transaction can be derailed at any point on the track. A trans- 
action can be hit by a clouded title, a home not appraising for value, a rapid 
change in interest rates, an undisclosed credit or income issue, or one of 
countless other unanticipated choke points. 

Choke points cause delays, and delays cause all kinds of problems for buyers, 
sellers, and agents. Moving plans are thrown into disarray, interim housing or 
early-possession requests become necessary, contingency plans need to be 
thrown together, and nerves get jangled. The resulting situation can be not 
only a nightmare for even the most seasoned agent but also a productivity 

Eighty percent of the problems in closing transactions fall into the following 
three basic areas. Stay on the lookout for these problems and solutions to 
steer your transactions clear of as much trouble as possible: 

u* Documentation and verification: Lenders need to assemble consider- 
able paperwork and complete dozens of documents based on informa- 
tion submitted by loan applicants. Then, lenders need to verify all 
information for accuracy by checking the applicants' employment 
status, funds on deposit, and income levels. The document preparation 
and information verification process takes time. Counsel your buyers 
that if they fail to submit the required information on a timely basis, or if 
they turn it in piecemeal, delays are inevitable. 

f" Repairs, repairs, repairs: Good advance planning can avert this choke 
point: When you're representing the seller, state clearly in writing that 
only lender-required repairs will be made. If you don't spell this out, you 


Part III: Developing a Winning Sales Strategy 


leave the seller open to the risk that the buyer will come back with a 
laundry list of items to be done. 

A lender-required note in the listing agreement for the other agent to see 
usually limits repairs to structural, mechanical, or health and safety 
issues, with not a word about nicks in a wall or non-matching door 
knobs. Having a lender-required note doesn't imply that the other agent 
won't ask for more, but it does serve notice that the seller is willing at 
this point to only remedy lender-required repairs only. 

Consider writing a dollar limit for repairs into the initial contract. The 
number isn't etched in stone, but it helps keep a lid on the potential 
amount for which your seller is responsible. The buyer may still refuse 
to lift the home inspection contingency until additional lender-required 
issues are dealt with, but the limit helps most sellers most of the time. 

is* Underwriting of the buyer's loan: The underwriter has complete power 
to approve the loan, approve the loan with additional conditions, or sus- 
pend the file until certain conditions are met, in which case the bor- 
rower starts the underwriting process all over again. 

Underwriters check to make sure that a loan meets guidelines for debt 
ratio, loan-to-value ratio, credit score, employment history, and other 
qualifications. They also evaluate the loan based on whether they can be 
bundled with others in a big loan package that can be sold to Fannie 
Mae, Freddie Mac, or another entity that buys mortgages. 

Very few lending institutions hold their loans to maturity. Most write 
loans, realize profits through origination fees, document preparation 
fees and margins on basis points, and then sell the loans within 30 to 60 
days, recouping the loan amount to sell again as part of the next loan 
deal. If an underwriter approves a loan that can't be resold, the lending 
institution has to keep the loan in its portfolio. If that situation occurs 
too often and too many loans can't be resold, the lending institution 
runs out of money to loan, driving it out of business. 

Of all the choke points in a transaction, the underwriting process can 
cause the biggest delays. Expect there to be times when underwriters 
slow things down with requests for second appraisals or additional doc- 
umentation of value, especially if the home is in a high price range. After 
you clear the underwriting hurdle, the documents can be drawn and 
sent to closing. 

Part IV 

Running a 
Successful Real 
Estate Business 

The 5 th Wave 

By Rich Tennant 

"Vlhat I need is a sound economic and environmental 

policy irom my "President, and an immutable sense o£ 

an infinite universe. Vlnat I'll take is a 4-bedroom 

gambrel in a nice neighborhood ior under $300,000/" 

In this part.. 

To paraphrase the Broadway lyric, there's no business 
like real estate business — no other business lets you 
launch a successful career with so little initial investment 
and build such success just by doing the right thing, skill- 
fully and consistently, at the right time. 

This part unlocks the secrets employed by the most suc- 
cessful agents in the field. It gives you the script to follow 
as you position yourself in your marketplace. It provides 
step-by-step advice for developing long-lasting and loyal 
business relationships. And, perhaps most important of all, 
it provides time-management advice so that you can live a 
rich and rewarding life while simultaneously running a busi- 
ness that you wouldn't trade for any other in the world. 

Let's get on with the show! 

Chapter 14 

Staking Your Competitive Position 

In This Chapter 

Understanding your marketplace and competitive position 
Knowing what statistics to calculate and monitor 
Determining and conveying your competitive advantage 

I\ sk most agents how they're different or better than their agent colleagues 
w \ or competitors and get ready to hear either a whole lot of hemming and 
hawing, or a lineup of platitudes about how they care more, work harder, make 
clients happier, or whatever. 

What you'll rarely hear is a summary of how the agent is statistically more 
effective than other agents, or how that statistical advantage translates into a 
strong position in the overall market and a dominant position in a particular 
market niche. 

If any of those terms sound foreign, read on. This chapter gives you a leg up 
by showing you how to analyze your marketplace, calculate your performance 
statistics, compare your statistics with market norms, and stake out your own 
competitive territory by knowing — based on clear calculations — exactly 
how you excel and what market territory you control better than anyone else. 

Competitive Positioning Defined 

If you don't know how you stack up against your competitors or how your 
performance is different or better than the average, take comfort in the fact 
that you're certainly not alone. It amazes me how even very successful 
agents often can't define their competitive positions. As a new agent you're 
certainly lacking in your track record. I show you later in the chapter how to 
create your competitive positions using your company to your advantage. 

In a sentence, your competitive position defines how your real estate practice is 
better than all others in some unique and meaningful way. You may be dominant 
when it comes to selling ranch-style homes, or you may excel in high-end or 
low-end properties or properties in a certain neighborhood or design category. 

20i) P art 'V: Running a Successful Real Estate Business 



In all cases, your competitive position must be real, defensible, and definable, 
which means it must be based on statistics, and that's what the following sec- 
tions of this chapter explain. 

The best agents — the most powerful, experienced, high-volume agents — 
share a single advantage: They know the statistics of their market, the statis- 
tics of their own performance, and their statistical position in the overall 
marketplace or in a particular niche market area. The truth is, however, that 
a very small percentage of real estate agents fit into this category. I estimate 
that this group is less than 1 percent of all agents. 

Recently I was on a coaching call with a powerful agent in the San Diego mar- 
ketplace. Her business was going great, but she was looking to the future and 
planning how to grow to an even higher level. She had compiled her sales sta- 
tistics, and we took some time to analyze her performance, define her position, 
and create a marketing strategy to build upon her competitive advantage: 

*<* Performance: In 2005, 56 homes were listed and sold in one of her 
market niches. Of those, 17, or more than 30 percent, were her listings; 
her nearest competitor listed two. By listings alone, she was 8.5 times 
more successful than any other agent in her competitive sphere. She 
also sold more homes in her niche than anyone else. Her closest com- 
petitor was a company of 75 agents that listed and sold five homes. 

**" Position: It didn't take long for the numbers to prove that she owned a 
dominant position in her market niche. She knew she was strong, but 
until she did the math she didn't realize just how strong a position she'd 
staked out. By the end of our call, she had the facts she needed to posi- 
tion herself as the Emerald Heights real estate expert. 

l** Marketing strategy: Emerald Heights includes 700 homes. Annually it 
sees an ownership turnover of 8 percent, which means that somewhere 
between 50 and 70 homes are bought and sold each year almost as pre- 
dictably as clockwork. To increase income, my client knew she couldn't 
just convince more people to sell. Her revenue growth would need to 
result from winning a greater portion of the existing business in the 
market, and that's what she's prepared to do. She plans to grow her slice 
of the market-share pie (which is discussed later in this chapter) by 
taking listings and sales from other agents. By presenting herself as the 
regional expert — with the indisputable statistics to back the claim — 
she's ready to attract an even greater number of qualified leads and con- 
vince an ever-growing number of clients to select her services based on 
the proven advantage she offers. 

If you're a newer agent, you probably don't yet have the stats to stake your 
competitive position. However, if you selected your real estate company well 
(see more on this topic in Chapter 3), your company likely does. Work with 
your broker to find out how your company excels in the marketplace and pre- 
sent your company's advantage while you build your own success story. 

Chapter 14: Staking Your Competitive Position 203 

Calculating and Analyzing Real 
Estate's Big Three Statistics 

Three key statistics reflect real estate sales success better than any other 
indicators. These statistics are: Average list price compared to average sales 
price, average number of days on the market, and average number of listings 
sold versus listings taken. The following sections look at the value and power 
of each calculation. 

Average list price to sates price 

The average list price to sales price ratio quantifies your skill and success in 
achieving the result you and your client expected when you priced and placed 
a home on the market. By presenting a strong list price to sales price ratio, 
you clearly illustrate your effectiveness for your sellers. 

boina the math 

To calculate your average list price to sales price ratio (or as I call it, list-to- 
sold ratio), follow these four steps: 

1. Make a list of all your listed homes that sold and closed over a span of 
at least three months, though a year is better. 

2. Add up the list prices of all the homes. 

Let's say that you listed three homes that sold in the last quarter. If 
those listings were priced at $259,000, $349,000, and $429,000, you had a 
total listed inventory of $1,037,000. 

3. Add up the sales prices of all the homes. 

If your listed homes that sold last quarter closed at $245,000, $337,000, 
and $405,000, then your total sold inventory was $987,000. 

4. Calculate your average list price to sale price ratio by dividing your 
total sold inventory by your total listed inventory. 

Using the above example, divide $987,000 by $1,037,000. The calculation 
results in a list-to-sold ratio of 95 percent. Based on your recent perfor- 
mance, a seller who lists with you can expect an average of 95 percent of 
the sales price. 

Total sold inventory * Total listed inventory = List-to-sold ratio 

Your list-to-sold ratio proclaims from the mountaintops your level of success. 
It's one of the first calculations I ask a coaching client to figure. The ratio 


Part IV: Running a Successful Real Estate Business 

establishes a clear benchmark of how an agent's doing at pricing and negoti- 
ating, and it provides a clear indicator of an agent's skills, abilities, knowl- 
edge, and systems. 



Using if our ratio 

Regardless of the nature of your marketplace, the list-to-sold ratio for all 
good agents varies only by a few percentage points. 

My view is that 95 percent is the bottom of the good range. An agent with a 
list-to-sold ratio of 95 percent loses $5,000 for every $100,000 in sales price. If 
you're selling a $600,000 home and settle for 95 percent of list price, the 
resulting reduction is $30,000! Aim for a ratio of 98 percent or above. 

Beyond achieving a list-to-sold ratio of 95 percent or higher, aim for a ratio 
that places your performance in the top tier of all agents in your marketplace. 
When you can prove to prospective sellers that you consistently achieve a 
higher-than-average list-to-sold ratio for your clients, their decision to entrust 
their home sale to you becomes vastly easier. 

To determine how your list-to-sold ratio compares in your marketplace, 
follow these steps: 

1. Figure out the average list-to-sold ratio for all agents in your 

Most MLS services provide this statistic for each geographic area they 
serve. Call your local MLS office, your local real estate board, or ask 
your broker to find the information. 

2. Compare your ratio with the market average. 

For example, over my career, my average list price to sales price was 
between 98 percent and 99 percent. My market's average was between 
91 percent and 95 percent. 

3. Use your outstanding performance statistics to prove numerically that 
clients will net more money working with you than with other agents. 

If your average is 98 percent and your market average is 91 percent, then 
sellers listing with you are likely to put 7 percent more in their pockets. 

If you're a new agent with few listed properties, rely on your company's list- 
to-sold stats while developing your individual performance. 

Whether you're presenting your own or your company's stats, you'll want to 
present numbers that are higher than market averages; otherwise they indicate 
serious problems with your business. If your stats are low, you need to work to 
improve your performance as explained in the next section. Until your stats are 
higher, omit talking about them during your listing presentations. 

Chapter 14: Staking Your Competitive Position £\) / 

Improving if our ratio 

Your list-to-sold price ratio shows your skill in pricing a home properly. 
Obviously if you take vastly overpriced listings and deal with the conse- 
quences later, your list-to-sold ratio will suffer accordingly Chapter 10 is full 
of advice on how to avoid this trap. 

The list-to-sold ratio is also a strong reflection of your skill in negotiating on 
behalf of a seller. In a neutral market, most initial offers come in at less than 95 
percent of the list price. For instance, a home listed at $259,000 might gener- 
ate an initial offer in the low $230,000 range. Whether it sells at that price or 
higher depends on the listing agent's ability to demonstrate to the buyer and 
buyer's agent the value of the property, with the aim of bringing the offer up to 
$250,000 or even $255,000, at which point the list-to-sold ratio climbs back to 
98 percent. For advice on how to deal with low offers, turn to Chapter 13. 

Finally, the list-to-sold ratio is affected by your marketing, staging, and expo- 
sure of the property. If these are some of your sticking points, see the follow- 
ing chapters for more details: Chapter 8 will help you plan successful open 
houses, Chapter 11 is full of staging advice, and Chapter 12 is all about mar- 
keting the properties list. 


AVevaqe days on the market 

Your ability to sell a home, on average, in fewer than 30 days clearly conveys 
to potential sellers your skill and success level. It further indicates your knowl- 
edge of competitive pricing. The 30-day mark is a good benchmark to shoot for 
provided that your marketplace is either a neutral marketplace or a seller's 
marketplace. If you're in a buyer's marketplace, you may see that number push 
up a little higher. 

An agent with a strong track record for quickly selling homes presents a clear 
competitive advantage to sellers for the following reasons: 

i* Agents that sell properties quickly generally achieve higher sale 
prices and put more money in their sellers' pockets. Buyers in today's 
marketplace are extremely sophisticated. One of the first questions they 
ask an agent is, "How long has the house been on the market?" Buyers 
realize that the best homes sell quickly. If they find out that a home has 
been slow to sell, they adjust their initial offer downward accordingly. 

t^* Sellers with newly listed properties have a stronger negotiation position 
when an offer comes in. If the home has only been on the market a few 
days, buyers realize that the seller is less likely to offer price concessions. 

w* Sellers with slow-to-sell homes sacrifice dollars through a lower sale 
price and through ongoing expenses for a home they no longer want 


Part IV: Running a Successful Real Estate Business 



to own. This two-edged sword is the one agents need to point out in 
order to shorten the time a home languishes on the market. Sellers often 
want to hold out for a higher offer, but as time goes by, that higher offer 
becomes less likely. Contrary to the beliefs of many clients, sellers don't 
make more money by waiting, say, 120 days rather than accepting an 
offer in the first 30 days from listing. In fact, studies show that sellers 
receive less and less over time. And while they wait, they have to make 
additional mortgage payments that do little to reduce their debt or 
increase their equity. 

By showing that your listings spend a lower-than-average number of days on 
the market, you'll present proof that prospective sellers gain a significant com- 
petitive edge and financial advantage when they choose to work with you. 

Doing the math 

To calculate the average number of days your listings spend on the market, 
follow these steps: 

1. Make a list of all your listings that sold during the last three months. 

Alongside each listing, note the number of days that passed between 
when the home was listed and when a sale contract was signed. 

2. Add up the days on the market for all homes on your list. 

For example, if you had five sold listings, one that sold after 33 days on 
the market and the others after 45, 62, 21, and 84 days, your total would 
be 245 days. 

3. Divide the total number of days on the market by the number of list- 
ings sold. 

If you had five sold listings last quarter that were on the market for a 
total of 245 days, your average number of days on the market per prop- 
erty over that period would be 49. 

Total number of days that all your sold listings were on the market 
of sold listings = Average days on the market ratio 


If you're a new agent and don't yet have a significant number of listings, find 
out the average number of days that your company's listings were on the 
market and present that figure while you're building your own business. 

Working the numbers 

When comparing your average days on the market ratio with market-wide 
real estate averages, take into account the following considerations: 

*«* After calculating the average number of days your own listings were 
on the market, conduct the same calculation for your overall MLS area 
or real estate board. 

Chapter 14: Staking Your Competitive Position £\)y 


As a new agent your initial numbers should be at least consistent with 
the market averages. You want to be able to sell your own individual sta- 
tistics as early as possible in your career. Selling your company stats 
exclusively will lead to trouble if you're still doing it 18 to 24 months 
after you begin your career. 

u* Be aware that the price range you sell in can affect the average number 
of days on the market. In general, homes in an area with a higher price 
range result in a higher average number of days on the market. 

If you have a high number of listings, consider creating average calcula- 
tions for various price ranges or geographic market areas. By doing this, 
you can create apples-to-apples comparisons with other agents by ana- 
lyzing performance in specific segments of the market. 

*«* When comparing your performance with market-wide averages, 
strengthen your competitive position by including in your calcula- 
tions homes that failed to sell. When doing so, be sure to disclose that 
expired listings are included in your calculations. By factoring in expired 
listings, you reflect the most comprehensive view of how many days 
homes sat on the market, whether they ultimately sold or not. 

By including expired listings in your average calculations, the market 
average will likely go up sharply because the vast majority of expired 
listings will have been on the market for 120 days or more. Therefore, if 
your overall market saw a number of expired listings and you personally 
had none, the gap between you and your competitors will stretch con- 
siderably and to your great advantage. 

Average listings taken Versus listings sold 

The average listings taken versus listings sold statistic is a competitive 
number that demonstrates to the world how well you do your job of selling 
homes. When you can say to a seller that you sell more than 98 percent of all 
the homes that sellers list with you, you present strong evidence to your 
clients that they can assume a greatly lowered risk when working with you. 

One of the greatest fears a seller experiences stems from these concerns: 
"What if I pick the wrong agent? What if I'm hearing fast talk from a salesper- 
son who wants to pound a "For Sale" sign in my yard even though he doesn't 
have the experience to get the job done?" By presenting your track record in 
the form of a high percentage of listings sold versus listings taken, you quickly 
erase those concerns and provide comfort and relief to prospects. 

In a neutral marketplace with good sale activity, the average listings taken 
versus listings sold ratio historically hovers around 65 percent. When you 
look at the number of sales against the number of expired listings and proper- 
ties withdrawn from the marketplace, the average is 65 percent. Think about 

2 /(/ Part IV: Running a Successful Real Estate Business 

it: That means one-third of the listed homes fail to sell for some reason or 
another. This is an astonishing figure that average agents and most sellers 
don't realize, and it's a nugget you can use to your competitive advantage. 

Doing the math 

To calculate your listings taken versus listings sold ratio, follow these steps: 

1. Add up the total of all properties you listed over the last three months. 

2. Of all properties listed over the last three months, add up how 
many sold. 

3. Divide the number of sold listings by the total number of listings to 
get your listings taken versus listings sold average. 

Number of all listings sold + Number of all properties listed = Average listings 
taken versus listings sold ratio 

Benefiting from a sky-high average 

($>9I£ When I was selling homes, I took more than 120 listings a year, of which only 

a couple failed to sell. I knew this average distinguished me and created a 
strong competitive position that I used in my listing presentations. I would 
ask the sellers: "Based on my average listings sold versus listings taken percent- 
age of 98 percent, would you agree that you really have no risk listing your home 
with me?" If I encountered hesitation or resistance after that statement, I'd pre- 
sent an analogy like this: "Mr. and Mrs. Seller, if Bobby came home with his math 
test next week and showed you that he scored a 98 percent, would you consider 
that an outstanding result?" If they didn't answer that last question with a strong 
"yes," I had to question whether they were the type of clients I wanted to win 
over. If they did say yes, I'd continue, saying something like: "So, that means 
you agree that 98 percent of listings taken versus listings sold is outstanding as 
well, correct?" 

Agents are paid to achieve results. The truth is that you can be the nicest 
person in the world, and you can call your sellers weekly, send them stuff in 
the mail, share marketing reports, and hand out coffeehouse gift certificates. 
You can fawn over them as much as anyone can. However, if you don't sell the 
home within the listing period, in their view you didn't do your job and you're 
incompetent. Not only will you not get paid for the sale of their home, but 
you'll also lose future sales from all the friends they would have otherwise 
referred to you. Sellers base their assessment of an agent's service solely on 
results. Did the home sell? Did they achieve the expected sales price? Did it sell 
in a reasonable time frame? Were they able to move when they wanted to? 

During a listing presentation, sellers obviously can't figure out exactly what 
their experience with you will be like. But the statistics and competitive posi- 
tions you present give them a pretty clear idea of what they can expect. Per- 
formance ratios tell your story in numbers and give prospects the facts they 
need to make good decisions. 

Chapter 14: Staking Your Competitive Position 2/1 


Over the course of my career, I regularly went head-to-head against a strong 
competitive agent who did almost as much business as I did. Frequently, we 
both sought the same expired listings and our calls and mailings to the owners 
often arrived almost in sequence. Yet when all was said and done, I ultimately 
never lost a listing to him. He never knew why, and I am sure it bugged him. My 
secret weapon was my list-to-sale ratio. His was terrible, sitting somewhere 
below 60 percent. When the client was making the decision, all I had to do was 
show the list of my active, pending, sold, and expired properties. Then I would 
put his list next to mine for the seller to review. I knew what I was up against 
when I was competing with him. I had the facts to present, and they worked in 
my favor every time. 

Sellers want to know their odds of success. Use your stats to show them the 
proven competitive advantage you bring to the table. Your list-to-sale ratio 
goal should be at least 95 percent. 

Interpreting the Findings 


Be ready and willing to invest time to analyze and interpret yours and your 
company's competitive position in the marketplace. Your broker may have 
useful stats to contribute, but you'll likely need to do additional work to cal- 
culate the Big Three ratios (which are described in the preceding section of 
this chapter) and apply their resulting stats to various segments of your mar- 
ketplace, including geographic areas and specific price ranges. 

Without solid facts, you can't possibly know, define, or describe your com- 
petitive advantage. Most agents try to create their advantage through a rela- 
tionship with a prospect or client. However, a relationship isn't enough to 
carry the day in a competitive marketplace. Read on to find out how to ana- 
lyze your competitive position. 

Finding yow edge 

Maybe your competitive edge is that you sell the most units, that you have 
the highest sales volume, or that your Big Three stats top the charts in a spe- 
cific geographic region or price range. Once you know your edge, you can 
market and leverage your point of difference to expand your business (and 
your income!). 

For instance, you may find that you rank in the top five for units sold in your 
area. You can leverage that strength as you expand into a nearby geographic 
marketplace with similar types of homes. Instead of starting from zero in the 
new market area, you can use your current dominant stats as a bridge. Instead 
of ranking in the top five for units sold in your current market area, spread 
your numbers over your current and future market areas, and you'll probably 

2 / 2 P art '^ : Running a Successful Real Estate Business 

rank in the top ten for the combined area. Then you can work from that 
respectable statistical position to gain more market share in your new, and 
currently weaker, area. 

Once you know your numbers, you can put them to work strategically and 
tactically as you devise a plan to expand your market share. The key is to 
start with the facts, dig to find your edge, interpret your edge, and exploit it 
to your advantage. No one is going to present you listings and sales on silver 
platter; you're going to have to win them yourself. 


Positioning yourself against other agents 

Knowing how your competition is performing and how you rank in the field is 
paramount to your success. Follow these suggestions: 

i^ Find out the Big Three stats — average list price to sales price, average 
days on the market, and average listings sold versus listings taken — 
for other companies and agents. These numbers provide you with a 
basis for comparison and help you begin the process of positioning 
yourself and your company with the consumer. 

u* Define your competitive advantage. Keep in mind that how you state 
your advantage is often as important as what you say. How you present 
your argument and how much confidence and conviction you have in 
your beliefs can make the difference between a listing and a futile effort. 
The common belief for the masses until the 1500s was that the world 
was flat. Facts aside, those who believed in the flat-world theory were 
more effective in presenting their argument than Galileo was in his day. 

*«* Convince your prospect of your advantage. 

When I was a new real estate agent, I certainly had fewer reasons to pre- 
sent as to why sellers should list with me than I did later in my career. 
But that didn't stop me from securing listings — largely because my con- 
viction about the advantages I could offer sellers was so strong. I would 
tell prospects that selling their home required a partnership with a 
focused, passionate, successful, and sales-oriented agent. I would 
explain that personal service, attention to detail, and creation and con- 
version of leads would sell their home, and that I was the agent for the 
job. I contrasted myself positively with other, more-established agents 
by explaining that sellers hardly benefit from working with an agent who 
passes them off to interact with a series of assistants who handle the 
paperwork, marketing strategy, and ad calls, sign calls, and open houses. 

My conviction regarding the advantage I offered sellers changed dramat- 
ically after a few years in the business. By then, I had assembled a service 
team and developed an excellent system for serving the client through 
others. Obviously, my argument changed as well. I explained to clients 

Chapter 14: Staking Your Competitive Position ^? / j 

that one person couldn't possibly do, with skill and precision, all the 
activities that a seller needs and demands from an agent. With so many 
hats to wear, a lone ranger agent can't possibly provide the level of 
exposure, communication, customer service, and expertise that the 
team of experts I represented could deliver. 

Both positions were truthful. Both had merit. The difference stemmed 
from my position at the time and from the way I felt and articulated how 
that position benefited my prospect. 

*«* Use numbers to demonstrate the clear advantage you present to clients. 

Realize that if prospects can't see a clear difference between you and 
other agents, they'll gravitate toward the easy choice, which is to select 
the agent offering the lowest commission rate or highest initial list price. 

Creating sates and sates Volume comparisons 

Evaluating your performance against other agents or companies in your 
market segment is a great starting point, but it's rarely enough to uncover 
your unique edge or point of difference. 

When you compare your numbers to MLS stats for the number of units sold, 
number of listings taken, number of listings sold, and total sales volume in 
your market area, you arrive at a picture of how you did compared to the 
market at large. However, chances are good that your business is focused on 
certain segments of the total market — likely you specialize in certain neigh- 
borhoods, certain price ranges, and even certain types of residences. To posi- 
tion yourself against other agents, you need to segment, or what 1 call slice 
and dice, the market-wide numbers. For example: 


«-" You can shrink the geographic area down to a concise neighborhood or 
region in order to compare your own performance with market perfor- 
mance in that niche region. 

v" You can expand the geographic area to include several neighborhoods, 
or even towns, in which you operate. 

v* You may want to analyze only real estate activity that falls in a certain 
price range. 

t-" You can choose to focus only on a segment that includes a particular 
property type. 

You must be ethical and fair when you segment the numbers. You need to 
create true comparisons and honest evaluations of the sales numbers and 
sales volume in each category you create. So long as you disclose the 
approach you took and define the segment you analyzed, I personally feel 
that focusing your analysis on a specific market segment is a fair way to 
define and present your strong competitive position. See the sidebar titled 
"Using statistics ethically and to your advantage" for a case in point. 

2 (11 Part IV: Running a Successful Real Estate Business 

Using statistics ethically and to your advantage 

When you compare your sales performance 
with that of other agents, sometimes you want 
to show how well you rank in terms of all the 
sales in your entire market area, and sometimes 
you want to focus on your dominant position in 
a specific segment of the market. You can 
expand or contract the portion of the marketyou 
focus on, so long as you're drawing a valid con- 
clusion that you explain clearly to your client. 

For example, consider an agent who is making 
a listing presentation to sellers in a specific 
development. She knows that if she presents 
her track record solely in the seller's home area 
she will rank squarely in the middle of the agent 
pack. This is hardly a winning position. 

However, if she expands the market area to 
include the seller's development and the devel- 
opment called Arrowwood, her ranking will 

shoot straight up to the top of the list, since 
she outsells her nearest competitor two-to-one 
in the Arrowwood area. She decides to show 
her sales performance based on market activity 
in both developments. When presenting her 
findings — and her dominant market position — 
she explains to the sellers that she expanded 
her market study to include transactions in 
Arrowwood, as well as in the sellers' develop- 
ment, because most buyers consider both of the 
developments when selecting a home similarto 
the type the sellers' will be listing. 

Her approach put her in a strong position. 
However, note that the approach was also eth- 
ical and clearly explained and wasthe basisfor 
a valid comparison that was useful to her and to 
the sellers. 

Calculating per-agent productivity 

Often, the largest company in a market will account for the largest sales 
volume and sales numbers, creating a strong market presence that eclipses 
the performance of small companies and individual agents. If you face a 
David and Goliath situation, reach down and pick up the per-agent productiv- 
ity stone to put in your slingshot. 

Calculate per-agent productivity by dividing a company's total sales numbers 
by the number of agents working at the firm. You can use this calculation to 
allow prospects to see listings taken, listings sold, total unit volume, sales 
volume, or buyer-represented sales at a per-agent basis. Suddenly, Goliath 
won't look quite so dominant. 


Using market-area statistics 
to set your goats 

Always know the average agent success numbers for your marketplace. 
These are the numbers you want to eclipse by the end of your first six 
months in the business — at least. 

Chapter 14: Staking Your Competitive Position ^? ( O 

Know the Big Three statistics (if you're not crystal clear about what these are 
and how to calculate them, turn back to the first pages of this chapter for def- 
initions and formulas) and know exactly how your own performance stacks 
up against market averages. I tell agents: Knowing thyself and thy competi- 
tion is the first rule to follow when you want to gain a competitive advantage. 

Once the stats are in front of you, you can compare your performance to the 
market area average. Ask yourself the following questions: 

V What doesn't look positive at first glance? 

*-" Where are you falling behind? 

*<* If you broaden or shrink the criteria, does your positioning improve? 

i* How can you craft a position from which to sell if you're stuck with 
these stats? 

Use the first two questions to set improvement goals. Use the third question 
to determine a segment in which you excel. Use the fourth question to pack- 
age the facts, whatever they are, into a position that you can present with 
confidence and conviction. 

Increasing \lour Slice of the Market 

Market share is the percentage of sales that you control in your marketplace. 
Market share can be based on listings taken, listings sold, buyer sales, sales 
volume, or sales by units. In any case, your share reflects the portion of total 
market activity that is represented by you or your company. 

Nothing attracts business more easily than dominant market share. When 
you've increased your slice of the pie to the point that it dwarfs your compe- 
tition, the prospects begin to seek you out. 

I coach an agent on the East Coast who, in the two towns she dominates, 
single handedly sells more homes than the number two and number three 
companies in sales and unit volume. Last year she listed and sold 66 proper- 
ties in her market areas. Over the same amount of time, the top competing 
companies together sold 59 properties. The balance just keeps tipping in her 
favor because success breeds success, and nothing indicates success better 
than dominant market share. 

How to calculate market share 

To calculate your market share, simply divide your production (or your com- 
pany's production) by the overall production of your marketplace. Your broker 
should be able to provide this information. 

a / P art '^ : Running a Successful Real Estate Business 

For example, say 575 homes were sold last year in your market area. If your 
company sold 215 of those 575, then your company handled 37 percent of all 
transactions and controls 37 percent of the market activity (215 * 575 = .37). 
Your broker should be able to provide this information to you. 

Also, calculate market share in various market segments by following the 
"slice and dice" advice in the section titled "Creating sales and sales volume 
comparisons" earlier in this chapter. You may find that your overall market 
share is low but that you have a commanding market share in a certain neigh- 
borhood or price category. 


How to increase market penetration 

Market penetration is another way to describe market share. If you command 
a large share of your market, you've achieved significant market penetration. 
If your market share is minimal, your penetration is minimal as well. 

A single agent can't expect to penetrate a broad market overnight, if ever. For 
years, I worked the east side of Portland, Oregon — a geographic area that 
was home to 750,000 people. Even as productive as I was, with 150 home 
sales a year, my market share was miniscule when compared to the size of 
the marketplace. I barely scratched the market surface, so penetrating it was 
out of the question. But within the market niche I'd carved out for myself, I 
was a dominant force. 


A niche is a segment of the overall market. Niche marketers serve a select 
group of consumers whose interests and needs are distinctly different from 
the needs of the market in general. Think of niche marketers as big fish in 
small ponds. 

You can create a market niche by serving consumers in a particular geo- 
graphic area or consumers seeking a certain property type. Or you can serve 
a certain type of buyer or seller or a certain income category — the list goes 
on and on. You can create a niche by focusing your efforts and increasing 
your penetration of FSBOs, expired listings, properties not occupied by 
owners, or small multiplexes. 

The key to gaining penetration in a niche is focus. You have to decide which 
smaller section of the marketplace you want to work in, and you have to quit 
trying to be all things to all people. After you identify your niche, you need to 
create presence, penetration, and dominance by following these steps: 

1. Make contact with prospects in your niche not just once but repeat- 
edly over a compact period of time. 

Studies show that it takes six impressions for a consumer simply to rec- 
ognize who you are. By increasing the number and frequency of contacts 

Chapter 14: Staking Your Competitive Position 2/7 

with prospects, you can increase your market awareness, which is a first 
step in achieving niche market penetration. 

2. Make personal contact. 

For most agents, the preferred method of contact with people located in 
a geographic segment is mail. They mail their prospects to death. They 
send refrigerator magnets, note pads featuring the agent's name and face, 
local football, baseball, or basketball game schedules, annual calendars, 
and more. Guess what? That's not enough to achieve market penetration. 

A few years ago, I started working with a client who wanted to penetrate a 
large gated community where the turnover of homes was brisk and the sales 
prices were high. She'd given herself a tall order because another agent domi- 
nated the market and controlled more than a third of all the community's real 
estate business. Luckily, though, the dominant agent had become lazy and 
reverted to easier contact approaches than face-to-face visits. My client 
moved in with well-designed marketing pieces for use in mailing, but also 
with a well-crafted personal contact strategy. When all was said and done, 
and her market share goal was met and exceeded, she determined that her 
success didn't stem from marketing pieces that were better than the other 
agent's pieces. Her success came from the fact that the people who lived in 
the gated community saw her frequently. 

Whenever anyone in her firm listed a property in the community, she'd ask 
and receive permission from the listing agent to hold its open house. Then, 
prior to the open house, she'd walk around the neighborhood personally invit- 
ing the neighbors. In between open houses, she provided the neighborhood 
with regular market updates. She was constantly visible in the community 
because she personally spent a few hours each week meeting and greeting her 
prospective clients. When an expired listing came off the market, she showed 
up at the owners' front door. When a FSBO sign appeared in a front yard, she 
was there as well. In fewer than 20 months she went from a single-digit market 
share to a share of over 30 percent. Meanwhile, the once-dominant agent went 
from 37 percent to less than 20 percent. She had been beaten by the effective- 
ness of personal contact. 

How to achieve market dominance 

To become a dominant market force, you need to take market share from 
someone else. Dominance involves growing your percentage of the overall 
marketplace until you control a greater share of market business than any 
competitor. In some markets, which are shared by a great number of competi 
tors, a 10 percent share may be dominant. In other situations, where fewer 
competitors exist, you may need 30 percent, or an even higher share, to be 
the dominant player. 

J? (O Part IV: Running a Successful Real Estate Business 


To gain market share dominance, first you need to gain recognition, which 
results almost automatically from simply doing more than you're expected to 
do. For example: 

*-" Do more personal prospecting. 

v Create more useable market and industry information. 

*«* Communicate more with your clients. 

w* Get involved in your community by sponsoring picnics, baseball or 
soccer teams, or community events. 

Going above and beyond what is expected will earn you recognition and create 
a buzz about how different you are. You'll enhance your reputation. Suddenly, 
rather than being an unknown agent, you'll be a "name," or a known entity. 
With the confidence you build through your awareness-development efforts, go 
one step further: Dare to do things that no one else is willing to do. 

My client from the anecdote in the preceding section was willing to take the 
risk of rejection by calling on and meeting people face-to-face. Her competi- 
tor, even though she was the market's dominant force at the time, was unwill- 
ing to subject herself to the potential rejection. Of all the approaches I've 
seen, I believe that establishing more personal contact is the easiest, most 
cost-effective way to move to a position of dominance in a real estate market. 

By taking each of the preceding steps — choosing a market segment, estab- 
lishing contact, gaining awareness, establishing personal rapport, going 
beyond what's expected, and daring to be different in your communication 
approaches — you'll penetrate your target market niche and be well on your 
way to achieving market dominance within 18 to 24 months. 

Contfeyinq \lour Competitive Advantage 
in Prospect Presentations 

The bottom line is that the whole purpose of a prospect presentation is to 
establish your competitive advantage. In the least time possible you want to 
communicate what makes you different from the more than 1.2 million other 
real estate agents in the United States. You want your prospects to see 
exactly why they should hire you, what's in it for them, and why they should 
sign your listing agreement with confidence. 

Chapter 14: Staking Your Competitive Position ^? / y 

Most agents spend the presentation explaining what they'll do for the client 
instead of focusing on the results the client can expect the agent to deliver. 
Newspaper ads, Web site pages, home magazines, dazzling flyers, and a lineup 
of other marketing items are tactics that, in truth, nearly all agents use in the 
normal course of business. However, they're not competitive advantages. In 
fact, you must assume before a listing presentation that every agent will 
promise a near-identical marketing plan. 

So why will they hire you over the others? They'll hire you because they see 
what's in it for them. And what's in it for them is the set of benefits they'll 
receive as a result of your proven competitive position. 


Defining your unique competitive position 

To differentiate yourself in the field of real estate sales you need to create, 
define, and consistently convey a competitive position that positively distin- 
guishes you from your competition. 

By knowing and exploiting the difference between your products and serv- 
ices and those of your competitors you'll attract more prospects, win more 
clients, grow your market share, increase your revenue, expand your profits, 
and, eventually, weaken your competitors. 

To pinpoint your unique competitive position, answer these questions: 

W Do any key statistics set you apart from your competitors and provide 
you with a clear point of difference? 

*-" Do any of your Big Three statistics create a unique competitive position? 

*<* What benefits or values will consumers receive only when they deal 
with you? 

*<* Do you have dominant or strong market share in a geographic region? 

U* Do you specialize in a particular property type, such as small multi- 
plexes, or a certain style of home? 

u* Is your market share success tied to a particular price point? 

V When representing sellers, do you achieve quantifiably higher sale 

v* When representing buyers, do you achieve quantifiable savings in sales 
price, down payment, monthly payment, or interest rate? 

280 P art '^ : Running a Successful Real Estate Business 

Your answers don't need to lead to 20 unique competitive positions. You only 
need half a dozen reasons why the consumer — whether you're presenting 
to a buyer or a seller — should choose you over everyone else. Focus only on 
advantages that matter to your prospect. Keep in mind the old sales adage: "It's 
easier to sell someone what they want to buy than what you have to sell them." 

Proving yow excellence: \lou don't 
yet paid for second place 

A Fortune 500 company CEO who doesn't increase his company's revenue 
will likely watch the company's stock price plummet. A quarterback who 
throws for lots of yards but doesn't win games will be benched or traded. A 
real estate agent who doesn't sell listings or find and secure the right home 
for buyers will be pushed out of the business. 

In the real estate world, results are the name of the game. 

Anyone can make money in a steady marketplace where everyone wants to 
buy and sell, but only the excellent agents thrive in a competitive market- 
place. Follow the advice in this chapter to define, present, and defend your 
unique competitive position and to secure your place in the group of excel- 
lent agents who consistently increase their market share and enhance their 
market dominance. 

Chapter 15 

Keeping Clients for Life 

In This Chapter 

Realizing your client's lifetime value 

Creating lasting, loyal client relationships 

Winning client loyalty with an amazing after-the-sale service program 

£very businessperson wants to win clients for life and for a good reason: 
It costs energy, time, and money to gain a prospect's awareness, win his 
attention, convince him of your benefits, and bring him into your business 
circle through an initial sale. If that first sale is the only sale you ever make 
with the prospect, your sales investment has only a one-time payoff. But if 
that client buys from you on a repeated basis — and refers others to you as 
well — your investment grows with each transaction and money-making 

The key to winning clients for life is to avoid suffering defections, such as 
when a customer decides to buy or sell with another agent or when a client 
doesn't join your referral team. 

Professionals in other businesses sometimes have an easier time keeping 
clients in their business circles simply because they have more opportunities 
to see and serve their customers. For instance, a car dealership sells a car 
and then, even if the buyer doesn't purchase another car for an entire decade, 
the dealership has the opportunity to see the customer face to face every 
time the vehicle is due for service, oil changes, or tire rotations. 

Like a car salesperson, a real estate agent makes big sales to clients on an 
infrequent basis. The difference is that in real estate, after-the-sale service 
isn't automatic. You have to create strategies to keep in contact with your 
clients and to continually remind them of the value you deliver. This chapter 
helps you do just that. 

282 P art '^ : Running a Successful Real Estate Business 

Achiei/iny Relationship Excellence 

As a real estate agent, your success depends on the quality and durability of 
the relationships you build with your clients, and the one and only way to 
build solid, enduring relationships is to deliver excellent, unrivaled service. 
To be an outstanding agent you need to lavish your clients (from the get-go 
and throughout the long haul) with service that exceeds their expectations. 

The challenge is that not all clients expect or want the same kind of service. 
What constitutes excellent service to one client may seem inadequate or 
even like overkill to another. You may not believe it, but an agent could sell a 
client's home in less than one week, at full price, and still have a dissatisfied 
customer due to some action during the negotiation, inspection, or closing 
that simply didn't match with the client's service expectations. 

To avoid service mismatches, figure out each person's service expectations 
by doing something that few agents take time to do: Ask. Then put your find- 
ings to work by following these suggestions: 

*<* Find out each person's service expectations. Before you enter a new 
prospect presentation, make it a rule to discover everything you can 
about what your prospects are looking for in an agent and how they 
define excellent service. For help, refer to the prospect qualifying tech- 
niques in Chapter 9. Keep in mind that many times there are two people 
making the decision to work with you as their agent. Be sure to under- 
stand each one's service expectation. 

v* Customize and personalize your service delivery. In your initial presen- 
tation and in subsequent contacts — whether you're working to make the 
sale, providing service to the client, building an after-the-sale relationship, 
or requesting a referral — refer to your initial research and highlight the 
service aspects that each client finds important. 

Weave in the words you heard the client use to define great service, and 
highlight the communication points he described as essential service 
attributes. Let him know that you understand his needs and are focused 
on exceeding his expectations. 

*<* Never become complacent. Don't assume that your best clients will 
simply turn a blind eye if your service falls a bit short. And by all means, 
don't think that your clients will say something to you if they want more 
or better service. They won't say anything because they don't want to 
endure the confrontation. They'd rather just go away quietly and never 
come back. 

Chapter 15: Keeping Clients for Life 28j 

Leveraging your client relationships 

Real estate agents can build business in one of 
two ways: Through nonstop prospecting and 
high-volume lead development that results in 
one-time clients, or through development of 
high-quality, durable client relationships that 
are leveraged into long-term business opportu- 
nities and invaluable referral sources. In a 
heartbeat, I'd suggest you take the latter route, 
and the following example demonstrates why. 

Say that overyourfirstdecade in the real estate 
business you serve, on average, 36 clients a 
year. In other words, overthe course of yourfirst 
10 years you help 360 clients into their homes. 

If you close each of those deals, cash your 
commission check, and never look back, all 
your effort will add up to exactly 360 business 

But if you cultivate those 360 clients with excel- 
lent after-the-sale service and the kind of 
genuine concern that results in long-term rela- 
tionships, you can turn your 360 past clients into 
a future-business gold mine, both in terms of 
repeat business and referral opportunities. 

The National Association of Realtors recently 
conducted research proving that the average 
consumer moves once every eight years. With 
that fact in mind, divide your 360 past clients by 
eight and you'll see that 45 of your past clients 
are likely to move in any given year. In other 
words, your own client base represents 45 new 
business opportunities — provided that you've 
maintained strong relationships with each one. 
And it's impossible to even count the number of 
referrals that come from 360 totally satisfied 
past customers. 


I've met agents who are successful in spite of their "my way or the highway" 
approach to service delivery Rather than focusing on customized service and 
long-term relationships, these agents prefer to serve a stream of here-today- 
gone-tomorrow clients that they acquire through relentless prospecting and 
high-volume lead development. These agents have a take-it-or-leave-it attitude 
about service. They practice what I call a fast-food joint philosophy: "We sell 
hamburgers and fries and if you don't like hamburgers and fries, pick another 
restaurant." The difference, of course, is that the number of people who want 
hamburgers and fries is huge, and if the fare is good, most customers automat- 
ically come back for more. The same is hardly true when it comes to home- 
buyers and sellers. While this approach does create sales, it does not build 
business for the future. This approach creates fewer referrals and less lever- 
age, so the agent will need to prospect relentlessly during their whole career. 

As an agent, your prospect universe is limited, and your customers aren't apt 
to become repeat customers unless you treat them with the kind of unparal- 
leled, consistent, and customized service that turns them into clients for life. 
(For an example of how you can build your business through relationship 
excellence, see the sidebar titled "Leveraging your client relationships.") 

2 Oil P art '^ : Running a Successful Real Estate Business 


Defining qow service standards 

One of the keys to relationship excellence is to define and communicate the 
kind of service you stand for before you share service delivery responsibility 
To help you define the level of service you want your clients to receive, 
answer the following questions: 

u* How frequently do you communicate with sellers? 

• How frequently do you make calls, send e-mail, or mail written 

• What is your process for sending sellers copies of your ads for 
their property? 

• Do you provide sellers with links to virtual tours or to Web sites 
promoting their property? 

• How often do you meet face to face, and do the meetings take 
place in the sellers' home or in your office? 

The number one complaint consumers have about real estate agents isn't 
that they charge or make too much money The number one complaint is 
that they're bad or infrequent communicators. If you're representing the 
seller, understand that your client wants consistent communication. If 
you aren't making a weekly call to provide an update on the process of 
the sale, you risk a poor customer relationship. 

*<* How do you receive and share showing feedback? 

• Do you call the showing agent once, twice, or three times in hopes 
of a response, or do you keep calling until you reach the agent and 
receive feedback? 

• Do you relay showing feedback to the seller right away, or do you 
collect feedback to share in a once-a-week meeting? 

u* What marketing strategy do you employ for each property you list? 

• What steps do you take to expose the home to cooperating agents? 

• What tools or systems do you employ to raise awareness of your 
listed property within the real estate community? 

• How do you generate awareness and interest within the public 
pool of real estate buyers? 

• What marketing techniques and systems do you use to attract 
qualified buyers to your seller's property? 

• In what order do you execute your marketing plan? 
See Chapter 12 for more guidance on marketing. 

Chapter 15: Keeping Clients for Life 283 

By delivering excellent service on a consistent and ongoing basis, your cur- 
rent client relationships will spawn repeat business and referrals that can 
draw new clients into your business. As a result, your success will reap even 
more success, your business will grow bigger, and you'll be expected to pro- 
vide superb service to an ever-growing number of people. At some point 
you'll face the important but difficult task of transitioning from an individual 
service provider to a service provider who works with a team that helps com- 
municate with and serve clients. 

Making the shift from do-it-yourself service delivery to delivery that's lever- 
aged through a team is an essential turning point in a successful agent's busi- 
ness. However, it's also a dangerous point for the following reasons: 

*<* Even though you know it's necessary to leverage your service ability 
by assigning tasks to others on your team, you may find it difficult to 
release ownership. This inability to let go can result in service lapses 
and frustration among both staff members and clients. 

*-" Unless you clearly establish and communicate your service philosophy 
and program to those on your team, you'll risk delivering an inconsis- 
tent or lower level of service to your clients. 

Figures 15-1 and 15-2 toward the end of this chapter help you as you create 
checklists that everyone on your team can use and follow. Once you're clear 
about what you stand for and how you deliver service to clients, you're in a 
position to train those on your team to deliver that same service on your 
behalf and, of course, to your standards. At that point, your transition from 
a one-person service provider to professional service team is complete. 

Promising, and then (lawlessly delivering 

It's one thing to have a service delivery plan. It's another thing to actually 
implement your plan on a never-fail basis. I've seen marketing packages from 
countless agents, and most of them include 15-point, 21-point, or 30-point 
service action plans provided by the national franchise or large company 
the agent works for. I always ask, "Do you really do all of these things?" The 
sheepish response from most agents is that they implement and do fewer 
than 30 percent of the service tasks listed on their marketing plans. 

The truth is that most agents don't follow through for two reasons: 

I*«* They over-promise. 
W They lose track of what they said they'd do because they lack a concrete 
system to follow. 


Part IV: Running a Successful Real Estate Business 


Here's my advice: Go through the multi-point action plan you currently use 
and separate out the highest-value activities that you know you can perform 
with total consistency. Then commit to flawlessly performing those tasks 
and to performing others when you can. In other words, be ready to under- 
promise and over-deliver. 

The separation between marginal performance and stellar performance doesn't 
come from an abundance of magical extras. Instead, it's the result of keeping 
your commitments. For the vast majority of consumers, a professional who 
keeps commitments is a rarity. 

Viewing the closing as a starting 
point, not a finish tine 

Great agents know that their job isn't over when the transaction closes. After 
you've achieved the sale, closed the deal, cashed the commission check, and 
spent the money, it's time to start fortifying your client relationship. Sure you 
need to get on to the next income-producing activity. But, as you cultivate 
your next deal, don't make the mistake of turning your back on the clients 
you just served. 

In fact, your clients could need you more after their closing than at any previ- 
ous point in your relationship for any of the following reasons: 

u* After moving into their new home, the clients may have discovered 
repair issues that need attention. They may need the name of someone 
who can fix their roof, or they may want names of service providers that 
do quality work and are honest, trustworthy, and fair. 

*«" Their home taxes may have shot up substantially and they may need 
you to evaluate the marketplace, research comparable properties, and 
complete a report of your findings that they can use to contest the 
increase in their property's taxable value. 

u* Your clients' home purchase may have sparked their interest in build- 
ing wealth through real estate investments. They may be thinking about 
how to secure their retirement or how to create a nest egg for their chil- 
dren's college educations. If your clients view real estate as a piece in 
their build-the-wealth puzzle, they may seek your advice about how to 
acquire and retain properties as a key step toward wealth creation. 

u* Your clients may simply be interested in how the market around them 
is doing. When you call these clients to chat, you're likely to get the ques- 
tion, "What's happening in the marketplace?" Now that they're homeown- 
ers, your clients are vested in the local real estate marketplace. Become 
their resource and you'll be first in line when they're ready to make the 
next physical or investment move. 

Chapter 15: Keeping Clients for Life 28 1 


After reading this list you may wonder why an agent needs to be told that the 
closing must be viewed as the first step toward securing a long client rela- 
tionship and countless service opportunities. The reason is that research 
shows this is an area of agent deficiency. 

The National Association of Realtors completed a study over a series of years to 
gauge the public's perception of real estate agents. They found that 69 percent 
of consumers rate the service they received from their agent as satisfactory or 
better. However, only 24 percent of clients used the same agent on an upcoming 
deal that they used on their previous transaction. The fact that fewer than one 
out of four clients went back to use the same agent, even though the majority of 
clients felt that their previous transaction was handled satisfactorily, is a shock- 
ing testimony to the fact that agents aren't developing long-term relationships. 
And from here, the figures get even worse. In 2004, the total number of real 
estate transactions hit an all-time high, resulting in 6.8 million sales in a single 
year. Of those 6.8 million sales, 21 percent, or approximately 1.4 million deals, 
involved experienced buyers and sellers who conducted investment or second 
home transactions. When asked whether they used an agent they had previ- 
ously worked with, only 13 percent, or 884,000 of these experienced clients, 
said yes. A full 87 percent, or 5.9 million sales, were handled by an agent the 
consumer had never used before. 

These stats reek of poor after-the-sale communication and woefully short 
relationship development. The only logical conclusion is that, in general, 
after-the-sale service in the real estate industry really stinks. The next 
section helps you break the stereotype. 

Creating After-the-Sale Sen/ice 


If you don't plan for it, after-the-sale service won't happen. You'll get so con- 
sumed with the next deal and with the task of earning the next commission 
check that you'll overlook the opportunity to create long-term revenue 
through your past clients. 

An after-the-sale service program is like many things in life: difficult to start 
and difficult to maintain. People get derailed before they take the first step 
and if they don't take the first step — the step that involves establishing the 
program they commit to follow — they can't begin to meet the objective. 

Use this section to guide you as you create your own after-the-sale service 
plan. It helps you define exactly what you need to do in the first 30 days after 
the sale, and shows you how to maintain the plan on an ongoing basis. 

288 P art '^ : Running a Successful Real Estate Business 

Laying the groundwork during 
the transaction period 

When working a real estate transaction, you have two prime opportunities to 
develop interpersonal connections and high-grade referrals: 

I**" During the transaction period when you're working with your client to 
buy or sell a home and close the deal 
u* During the 30 to 45 days that follow the closing 

If you do a poor job during the transaction you'll be hard pressed to recover 
lost ground after the closing. An attorney that blows a case doesn't get a 
second chance from the client, and the same holds true for real estate agents. 
Your service during the transaction must be stellar or you'll sacrifice the 
chance for repeat and referral business, which is the easiest and least costly 
business to acquire. If that isn't bad enough, you'll also lose the opportunity 
to collect client testimonials and generate positive word-of-mouth. 

During the transaction period you're in frequent contact with your clients 
and have ample opportunities to provide excellent service; make a strong, 
positive impression; and develop the basis for a long-term relationship. For 

u* When you first begin to work with clients to buy or sell a home, their 
enthusiasm is high. They fully anticipate and expect that they'll be able 
to find a buyer or the perfect home and that you're the ideal agent to 
accomplish the task. During this initial period, your clients think about 
little other than their real estate hopes. Your presence becomes woven 
into the fabrics of their lives and their conversations with friends and 
family members. This is an ideal time to ask for and win referrals. For 
more on asking for referrals, turn to Chapter 6. 

v* If the sale or purchase process drags on, expect your clients' level of 
excitement and energy to ebb. At the same time, expect their focus on 
their purchase or sale to intensify. The most important thing you can do 
during this potentially dangerous time — when your clients are experi- 
encing concern and talking nonstop about their real estate issues with 
others — is to stay in frequent communication, offer solutions, provide 
calm, professional advice, and retain the clients' confidence in you and 
your abilities. 

Refer to the section "Defining your service standards" earlier in this chapter 
as you establish a plan that ensures frequent and professional contact 
throughout the transaction period. 

Chapter 15: Keeping Clients for Life 28y 

Setting a service agenda for the 
first 30 dags after the sate 

If you did everything right during the transaction (which I'm going to assume 
you did), then your clients were likely totally satisfied with your service when 
the deal closed. Now you have a decision to make: Do you wish your clients 
well and walk away, or do you begin an after-the-sale service program that 
turns them into clients for life? You've seen this chapter's title, so you already 
know the answer: You begin turning them into clients for life. How? I'm glad 
you asked. 

Calling your clients regularly 

Begin by personally calling your clients at least four times during the 30 days 
after the closing. Following are some suggestions: 


v* Call in the first few days after the closing to thank them for allowing 
you the opportunity to serve them. Tell them how excited you are 
for them to be moving into their new home. Share an anecdote about 
working with them that will make you all laugh and that will touch their 

After the call, send a hand-written thank-you note further expressing 
your thanks and asking for future business or referrals. 

u* By the end of the first week, call again. Once again, thank them for 
trusting and allowing you to be their agent. Then ask how the move went 
and whether anything got broken. You can also ask whether the kids like 
their new rooms and whether they've met any of the neighborhood kids 
yet. Finally, find out whether the seller left the home properly, which 
allows you to ask whether your clients need your help with anything. 

This last question can open a Pandora's box of issues, and that's exactly 
the reason to ask it. If the sellers caused problems when they left and 
you don't know about them, you may be blamed for the mishaps without 
any opportunity to make them right. Most issues will be between the 
seller and the buyer, and, unfortunately, power over the seller — unless 
legal action is involved — is gone because the transaction has closed. 
Sometimes all you can do is provide a listening ear and sympathetic 
voice. Other times you can make a few phone calls to help right the 
wrong. The fact that you're willing to listen and try to help speaks louder 
than any demonstrable action — it shows that you care. 

At the conclusion of the second call, send another hand-written note. 
Express concern for the unresolved issue, and again thank them for their 
trust and for taking the time to talk with you. 

2y(/ P ar t 'V: Running a Successful Real Estate Business 


*<* Call again at the two-week mark. Ask how the unpacking is going and 
how they're settling into their new home. Update them if you've made 
progress on the issue that was concerning them. Ask about the kids and 
their transition. Before hanging up, ask if your service is needed. Also, 
ask them for referrals. 

*«* On their 30-day anniversary in the home, call again. Congratulate 
them on their great decision in selecting this home. Check on the kids 
and their progress settling in to the house and neighborhood. Thank 
them again for the honor to serve them. 

This approach sounds simple, but don't underestimate the power it has in 
enabling you to lock your clients in for life. You'll not only gain a lifelong 
client, but you'll also open the door to referral business that flows freely. 

Catting the other buyer or setter involved in the transaction 

While you're at it, call the other party involved in your real estate transaction 
as well. 

Every real estate deal involves a buyer and a seller. In most cases you repre- 
sent only one of the two parties, but why not call and offer after-sales service 
to both? Do you think the other agent is doing this? For your answer, you 
only have to look at the National Association of Realtors' 2004 finding that 
only 13 percent of real estate clients used an agent they had used previously 
to represent their interests. My estimation is that fewer than 10 percent of 
agents actually call their clients after closing. 

When calling to follow up with the party represented by the other agent in 
your transaction, be ready for a response of surprise and great appreciation. 
The fact that you're willing to call four times in one month, while the agent 
who got paid to represent their interests hasn't called even once, will posi- 
tively awe most people. By the end of your 30-day after-sale service period, 
the names of the other agent's clients will be in your database, and you'll be 
the one receiving their referrals. 


Sending your client a gift 

You may want to consider delivering or sending a gift to your client, congrat- 
ulating them on their new home and thanking them for letting you do busi- 
ness with them. This gift is usually called a closing gift. 

Don't take the gift with you to the closing. Here's why: 

is* At the closing, your clients will be focused on the transaction and think- 
ing about their impending move and all the challenges that lie in front of 
them. Your gift will get lost in the shuffle. 

Chapter 15: Keeping Clients for Life 2yl 

is* The papers presented at the closing put the amount of the real estate 
commission in writing, causing your clients to focus on exactly how 
much money you made from the transaction (see the upcoming sidebar, 
"The problem with commissions," for more on this topic). If you give 
your gift at the same time, they could make a negative comparison 
between the value of the gift and the money you received. 

If you want to give them something at closing, give them a hand-written 
thank-you note. 

Personally, I think that sending a closing gift is optional. For many agents, 
doing so is common practice. However, other agents view their services as 
similar to those of doctors, dentists, attorneys, and so on — you don't usually 
get a gift basket from your surgeon after he does your gall bladder surgery. If 
you feel that sending a gift is a useful tool for opening the door to future busi- 
ness and referrals, by all means go for it, but never think that you have to. 

If you have decided that giving a closing gift is a strategy that you're going to 
implement in your business to open the door of referrals, here are some sug- 
gestions for finding the right gift to use: 

i^ In choosing your gift, don't go overboard. Save any over-the-top ges- 
tures you may want to extend until after your clients have settled in and 
after your commission has long-since been paid. The more you deliver 
after you get paid, the more your gift communicates that you care about 
your clients, not just your commission check. 

*<* Find a closing gift that reminds clients of you and your service. Give 
them something that can be used rather than consumed. A great bottle 
of wine or gift basket quickly disappears. A customized mailbox, door 
knocker, or yard plant will last almost forever. 

i* Deliver the gift to your clients' new home. By taking or delivering your 
gift to your clients' new home, you'll put it in their hands at a time when it 
can create the most significant feelings of goodwill, warmth, and referrals. 

Another nice gesture is to help your clients notify their friends of their move. 
Offer to create and print a couple hundred postcards with a picture of their 
new home on the front. Then offer to mail them out on your clients' behalf. 
You'll save them the cost of postage, and you'll enlarge your database to 
boot. You may even call people on the list to make sure they received the 
card you sent for your client. You could then offer them a market conditions 
report that you create for your clients for free (turn to Chapter 4 to find out 
how to research and understand your marketplace). Ask them if they would 
like that mailed or e-mailed to them. You're hoping that they say e-mail, so 
you can get their e-mail address. This first step can lead to a relationship 
with a new potential prospect. 

£y £ P art 'V: Running a Successful Real Estate Business 

The problem with commissions 

When closing time arrives, sellers basically 
receive, right there on the closing papers, a bill 
for the agent's services. By the time they see 
that big 6 percent figure staring them in the 
face, chances are they've already forgotten the 
risk you took with your time and money to 
market their home. When they see how much 
the commission slices into their home proceeds, 
they've likely forgotten about many of the ser- 
vices you provided. Not to mention they never 
even knew about the other countless efforts you 
provided — calls to lenders, title companies, 
attorneys, repair contractors, other agents, 
appraisers, and all the other partners involved 
to achieve the sale, or purchase, of the clients' 
home. Since most agents do little afterthe sale. 

the clients' parting memory is how much you 
got paid, which isn't exactly a great way to 
launch a long-term relationship. 

I really believe that the way we collect our 
income, or fee, makes it more difficult to 
achieve warm feelings from our clients, and I 
think it hardly encourages customer retention. 
However, I'm not advocating changing the com- 
pensation structure. In fact, I'm a true believer 
in the plan. But I caution you to remain aware of 
its inherent challenges and to make doubly sure 
that your last contact with your clients isn't on 
the day you get paid. After-the-sale service is 
the best antidote. 

Establishing an ongoing 
communication strategy 

After your clients have completed their moves and put their real estate trans- 
actions behind them, you still need to be in touch at regular intervals if you 
want to remain on their radar screens. 



Unless you develop a pattern of frequent communication with phone calls, 
e-mail, direct mailings, and other forms of contact, too many clients (even 
your best ones) may not remember you at the important moment when they 
need real estate counsel or when their friends need it. You need to constantly 
remind them that you're still in the business and ready to be of assistance. 

I have a coaching client in New Jersey who happens to be one of the best 
agents in his state. During a recent conversation he shared with me his disap- 
pointment with the number of referrals he was receiving from past clients. He 
follows a good system to communicate with his clients frequently, but when 
it came to referrals the results weren't what he wanted. He emphasized his 
frustration by saying that he had been in the business for seven years and 
hadn't received a single referral from his own mother! I followed up with an 
obvious question: "Have you ever asked her for a referral?" His response was 
similar to the one I hear from most agents: "She's my mother. She knows I'm 
in real estate. I didn't think I had to ask." You can replace the word mother 

Chapter 15: Keeping Clients for Life £yj 

with best friend, little brother, older sister, favorite cousin, aunt, father, wife's 
boss, accountant, attorney, pastor . . . you get the idea. The lesson is exactly 
the same. You may think that the people you know should remember your 
business and assume that you welcome referrals, but they don't. That's why 
ongoing communication is essential. 

Now here's the rest of my coaching client's story. He agreed to add to his 
upcoming week's action plan a call to his mother, during which he'd ask for a 
referral. The next time we talked, he seemed subdued. When I asked if some- 
thing was wrong, he answered sheepishly, "I called my mother. A day later, 
she called me with a referral. I've already listed and sold that home. She called 
me yesterday with another, and I'm going out tonight to list that home." He'd 
waited seven years to get his first two listings and sales from his mother's 


If my coaching client's mother can forget to recommend her own son because 
he lacked an ongoing communication strategy, anyone can forget you're an 
agent (or may not realize the importance of referrals). See Chapter 6 to find 
out the best way to ask for a referral. 

Using direct mail 

Direct mail is still one of the best ways to generate business, but only if it gets 
to the right people and only if it gets opened and read (instead of thrown 
directly in the trash with the other junk mail). To get your mail to the right 
people, create a carefully developed list that includes the addresses of past 
clients and people within your sphere of influence, which basically consists 
of the people you know. 

To get your mail opened, make it look personal. People sort their mail with 
the garbage can close by. They rifle through the pile and within seconds put 
pieces into an A pile that definitely gets attention, a B pile that has a 50/50 
chance of getting opened, or straight into the trash. You should strive to get 
into the A pile. 

Don't let distance become a barrier 

Too often agents make the mistake of ignoring 
people that have moved out of their area. Some 
sales training programs even advocate forget- 
ting about them. I find that approach to be short- 
sighted. Most people continue relationships 
with others even after moving away. This is 
especially true with the advent of e-mail com- 
munication. My advice is to keep calling and 

sending e-mail newsletters as you usually 
would for other clients. These people may send 
referrals, move back, or even move somewhere 
else. You could refer them to an agent who 
could sell their home or help them find another 
home and receive a referral fee for doing so. 
Not a bad way to earn 25 percent of the com- 
mission for each sale by keeping in touch. 

£ylX Part IV: Running a Successful Real Estate Business 


To get your mail into the A pile, try putting these tips to work: 

*«* Send your correspondence on notecard-sized stationery. Notecard 
stock is very different in size and quality from the bulk of other mail, 
so it naturally stands out. The notecard stock seems like an invitation 
to something special. This approach makes clients feel different and 
special, and it starts the minute they see the envelope. 

i^ Handwrite the envelope address. To avoid sending mail that resembles 
junk mail, don't use computer labels. If you have to use labels because 
your writing resembles hieroglyphics, use clear labels that are almost 
invisible. At a glance, clear labels allow your address to appear typed 
onto the envelope. 

u* Send special occasion cards. Use the clients' anniversary, the anniver- 
sary of the day they moved into their home, Mother's Day, Father's Day, 
and birthdays to reinforce your connection with the clients and to 
remind them that you care. Also send thank-you or "just-thinking- 
about-you" cards. 

*«* Send mail to their children. Separate yourself from nearly all of your 
clients' other business contacts by taking an interest in their children. I 
didn't understand the value of this connection until I had children. Now I 
know firsthand that someone who transfers value, service, and kindness 
to my kids is someone who will get my business forever. Send your clients' 
children birthday cards. Include a certificate for a treat at the local ice 
cream parlor and you'll really get noticed, both by the kids and their 

Don't expect your direct mail program to just happen spontaneously. Plan it 
out a year in advance. Select about a half a dozen dates over the course of 
the year to send handwritten cards to past clients or people in your sphere. 
Program the dates and nature of the mailers into your database to remind 
you when to do it. Just make sure to follow through. 

Staying in touch Via e-mail 

E-mail provides an easy and cost-effective way to deliver correspondence to 
your prospects and clients. To be as effective as possible, create a list full of 
addresses of recipients who want to receive your mailings. However, make sure 
that new prospects have given you permission to send them your mailings. 

I suggest that you establish at least two databases of e-mail addresses: 

One database should include the names and addresses of all 
prospects that have given you permission to send them e-mail mes- 
sages. When you send e-mail to this set of people you're trying to gener- 
ate interest and confidence and to coax them into a working relationship 
with you. The text in their messages is sales-oriented and articulates 
reasons why they should immediately take action in the real estate 

Chapter 15: Keeping Clients for Life £yj 

market. Mailers may focus on appreciation rates, inventory levels, inter- 
est rates, and projections of future rate increases. Additionally each 
mailer should include a concise statement about the value of doing busi- 
ness with you, why they should hire you, and the benefits they'll receive 
from working with you instead of the competition. 

w A second database should include the names and addresses of past 
clients and those in your sphere of influence, which includes friends, 
family members, and professional associates. When mailing to this 
group, tone down your sales message. You still want to provide an update 
on current and emerging market conditions, and most certainly you still 
want to convey the value you deliver, but you want to do it all with a 
softer, more personal approach. Your purpose when mailing to this group 
is to generate referrals. By sharing marketplace facts, you provide them 
with information they can use in their conversations with their friends. 


When compiling your databases, make sure that you obtain and include 
e-mail addresses for each person you want to reach in a home or business. 
For instance, my wife and I each have our own e-mail addresses. If you only 
send to my e-mail address, she would never see your mailer because I wouldn't 
take the time to forward it to her. I guarantee that we're not an unusual couple 
in this respect. 

When mailing to your prospects, put the following advice to work: 


W Send a monthly newsletter. Choose a template from your word process- 
ing program or one of the countless third party resources. Then all you 
have to do is fill in the text area with your customized message. 

*<* Develop content that is solid, helpful, positive, and valuable. The text 
doesn't have to be earthshaking in terms of news value. And it doesn't 
have to be written in award-winning prose. It just needs to be current, 
customized to your local market conditions, and capable of making a 
good impression over the few minutes between when it's opened and 
when it's deleted. 

Note: It should be free of spelling and grammatical errors, however. 
Nothing shows a lack of intelligence or attention to detail as correspon- 
dence with poor spelling and grammar. If you're like me and aren't 
skilled in grammar and sentence construction, make sure that you have 
someone who can help you make your correspondence look top notch. 

w Avoid e-mail blasts that send the identical message to a long list of 
addresses. The exception is when you're sending a newsletter or news 
flash to your full list. In all other cases, work to personalize the notes 
you send. Your clients are well-versed in e-mail and know exactly how 
much (or little) time and effort goes into a communication that involves 
absolutely no personalization. Subconsciously, they'll translate the mass 
mailing as a definition of the quality of your relationship with them. For 
that reason alone, use mass e-mailings sparingly. 

£y\) Part IV: Running a Successful Real Estate Business 


When e-mailing market updates, don't become lazy when relaying market 
facts. When the MLS shares that the average home price went from $205,458 
to $221,497 over the last year, the numbers really don't mean much to clients 
or prospects. But if you take the time to do some math, you can tip your 
e-mail recipients off to the fact that home prices in the local market area 
increased by 7 percent in the past 12 months. That kind of figure is memo- 
rable and gets passed along, with your name as the source. 

Spam, or e-mail that isn't requested or wanted by the recipient, is the dirge of 
the online world. In 2003, the U.S. federal government passed the CAN-SPAM 
Act, which requires, among other things, that anyone who sends commercial 
unsolicited e-mail must follow some clearly stated rules. The mailer must be 
clearly identified, it must include a valid physical postal address, it must pre- 
sent a means for the recipient to opt-out or unsubscribe, and the person or 
organization sending the mailer must honor unsubscribe requests within a 
specific time frame. Be sure your mailings comply. 

Picking up the phone 

In your effort to stay in touch, add value, and generate referrals, you want to 
pick up the phone and call some of your contacts weekly, some monthly, and 
maybe some only one time each year. If you don't reach them, leave a message 
so they have a record that you called them. To organize the effort, create phone 
lists that are segmented by the level of connection and frequency of contact you 
have with each group. Use the following as guidelines: 

u* Your star clients and closest friends and associates deserve star treat- 
ment. These people are sold on you and the service you provide. They 
want to help you advance your career. They're happy to hear from you 
and they're likely to send you more referrals than any other group on 
your contact list. It's okay to treat them differently from everyone else. 
In fact, it's good business. Call the people in this category monthly or at 
least one time every other month, and weave a referral request into each 

*«* Past clients and those in your sphere of influence should be called at 
least once a year. Unless you have an enormous database, anyone you 
have serviced in your career should hear from you personally and over 
the phone at least once every 12 months. 

Don't hesitate to pick up the phone and make calls just to thank people for 
their business, see how they're doing, and ask if you can do anything for 
them. Most consumers, when called by a service provider, are delighted and 
honored by the contact. If you got a friendly call out of the blue from your 
insurance agent, attorney, accountant, or financial advisor, you'd be both 
surprised and pleased. The same is likely to be the case when you call your 

Chapter 15: Keeping Clients for Life £y( 

Shouting appreciation 

The National Association of Realtors now includes more than 1.3 million 
members. Obviously your clients have a choice! Do you thank them often 
enough for choosing you? 

.<$0 T £ I have to admit that I've become aware of how little common courtesy is 

extended in our society as the result of our efforts to instill the "magic" 
words — "please" and "thank you" — into the conversations of our four-year- 
old son, Wesley. I'm amazed at the positive responses we receive from wait- 
ers, grocery store clerks, bank tellers, and other service providers. They 
heap praise about what a polite little boy he is when he displays courtesies 
that should be standard fare in everyday exchanges. 

From watching the reactions to my son, I'm more certain than ever that you 
can set yourself apart by conveying courtesy and appreciation to your clients 
on an ongoing basis. Express thanks several times during the transaction and 
again after the closing. Say thank you every time clients sign anything like 
a listing agreement, buyer agency contract, or an offer or counter offer. 
Frequently affirm that they've made a good decision by working with you 
or choosing to buy their home. 

The pouter of a thank-you note 

I truly believe the most powerful force in the business world is a handwritten 
thank-you note. That may sound terribly "old school" to techno-sawy agents, 
but it's exactly what you need to send if you want to set yourself apart. 

I remember my mother sitting down with me and my two brothers at the 
kitchen table each year after Christmas to write thank-you notes for the gifts 
we received. Over our protests, she insisted that by accepting the gifts, we 
accepted the responsibility to write a thank-you note. 

Back then, writing thank-you notes was a standard operating procedure. 
Today, thank-you notes are rare, and as a result they carry far more weight. 
They convey, in essence, "You matter so much that I took the time to craft a 
message with my own hand." 

Select note cards that are simple both inside and outside. If you work for a 
national franchise there will be hundreds to choose from in multiple cata- 
logues that encompass your company's logos. Don't select cards with too 
many words on the inside. The words on the inside should be your own. 
The key is handwritten and notecard size not letter size. 

Exceeding expectations 

The keys to exceeding expectations are few and pretty obvious: Extend cour- 
tesy. Say thanks. Demonstrate appreciation. And always be professional and 
keep in mind that little gestures go a long way toward building strong rela- 
tionships. You don't have to go overboard. Small gifts like ice cream cone 

2yO P art '^ : Running a Successful Real Estate Business 

certificates for the children, movie tickets for the adults, or coffee shop 
coupons make the point that you appreciate working with your contacts and 
receiving their referrals, whether they result in business or not. 

My only caution is to be sure that every gesture you make further enhances 
your professional reputation. A few years back, the Wall Street Journal fea- 
tured a profile on the service styles of three real estate agents. One bought 
groceries for out-of-town clients before they arrived to enjoy their vacation 
home. Another would personally mow the lawns of out-of-area sellers. A third 
reduced his fees to accommodate client requests. Each exceeded expecta- 
tions in a way that lowered the professionalism and status of the real estate 
agent community. I can't think of a doctor, dentist, attorney, or accountant 
that would provide these types of services to exceed expectations. 

Keep your efforts in line with your professional image — you don't want to be 
known as a personal shopper or a lawn boy. Getting groceries for out-of-town 
clients is thoughtful but inappropriate for a professional. However, helping 
arrange for a personal shopper is both thoughtful and professional. 

Customizing yow messages 

From an early age, every child learns the Golden Rule: Treat others the way 
you want to be treated. Customer service pros replace the Golden Rule with 
the Platinum Rule: Treat others the way they want to be treated. 

The Platinum Rule was coined by speaker and trainer Tony Alessandra, who 
explains that a salesperson's job isn't to treat and serve clients as you want 
to be treated but as they want to be treated. The only way to know how a 
person wants to be treated is to ask and observe. Different kinds of cus- 
tomers have different values and service expectations. A one-time transac- 
tion client expects a different level of attention than is expected by a long-time 
relationship client. A busy executive expects more efficiency than is expected, 
or even desired, by a person with a fairly empty calendar. 

By discovering and recognizing a person's communication style, decision- 
making style, and expectations, you can supercharge your business. Visit 
www.realestatechampions .com to find out more about this customized 
approach to business building and client building. 

The difference between junk mail and personal mail boils down to a single 
question: Is the message targeted and tailored to the interests of the recipient, 
or could it just as easily have been sent out to any other home in the city?" 

The more you segment your database, the better you'll be able to customize 
the messages you send. Prospects, clients, and those in your sphere have dif- 
ferent information needs. Likewise, those with various interests will respond 
to different kinds of messages. 

Chapter 15: Keeping Clients for Life £yy 

Segment your mailing list by the nature of your relationship with the contact 
and also by the recipients' lifestyle facts, such as age group, special interests, 
spiritual faith, and whether they have children. Then with a few keystrokes 
you can pull up address lists of people with shared interests and information 
needs. You can send a great article on golf to all the golfing enthusiasts in 
your database. You can send an invitation to a family-oriented event to all 
prospects with children. You can be sure that every mailer that leaves your 
office conveys that you know and care enough about the recipients' interests 
to send appropriately tailored information. 

Establishing Awesome Service 

Awesome service is essential to keeping clients for life, and the essentials of 
awesome service are positive service encounters, having a service plan, and 
making sure you meet the customer's expectations of what awesome service 
is. This section shows you how to do just that. 

Ensuring positive service encounters 

A service encounter happens any time that a consumer interacts with a servic- 
ing organization. Every Web site hit or incoming ad or sign call is a service 
encounter. When a prospect talks to anyone on your service team — you, 
your staff, your company receptionist, your closing coordinator, or your 
broker, owner, lender, escrow or title attorney — he or she is having a service 


If one person in the long chain of people who help you get your job done says 
or does anything negative, it affects the prospect's impression of the entire 
service encounter. You can't separate yourself from your colleagues if they 
mess up. It's even possible for your service to be tainted by those outside of 
your service team. For example, say that a buyer uses a lender other than the 
one you recommend. If the transaction closes late and with a higher interest 
rate than originally quoted, that client will leave with a bad impression about 
the whole transaction and everyone involved in it. Because of the actions of 
someone outside of your influence, your future business and referral oppor- 
tunities will be on the line. 

To direct your service toward superb outcomes, follow these suggestions: 

w* Control service encounters by using your own people to conduct 
transactions. Direct and drive as much business as possible to the best 
providers. Work hard to convince the client to use people on your team 
when securing a mortgage or closing the deal. Some may call this "steer- 
ing," but I view it as taking care of your clients. 

j(/(/ Part IV: Running a Successful Real Estate Business 



is* Make sure that your client works with the lenders who know their 
stuff and are responsive. Be aware that the lender triggers the choke 
point in most transactions. Take time to counsel your client and guide 
him toward a resource you know will perform. 

i^ Have a plan for recovering from service disasters. If your client is rea- 
sonable, no situation is too far gone to salvage. In fact, handle the prob- 
lem well and you're apt to turn a disgruntled client into one of your most 
vocal supporters. Follow these guidelines: 

• Do what is necessary to right the wrong. This seems obvious, 
but too many agents fail to heed this advice. For example, if your 
ad is wrong for a property, run an additional one even if it costs 
you money. If you forgot to ask for the refrigerator as the buyer 
asked you to in the offer, buy one for them. You must do what is 
required to make the client whole if you make an error. 

• Find out from the client what it would take to turn the unsatis- 
factory situation into a satisfactory one. Ask what it would take 
for them to be delighted. However, be cautious here. I don't really 
believe that forgoing a fee or reducing a cost ever creates a more 
satisfied client — they'll just be unhappy customers with more 
money in their pockets. The service and the cost aren't linked at 
this stage of customer satisfaction. 

• Avoid the blame game. If you point out that it was the client's 
decision to use the service provider who caused the problem, you 
only make the situation worse. Using the I-told-you-so attitude is 
never a way to soothe feelings. 

• Follow up. Eventually sore feelings will wane, but the only way to 
replace the negative impression is to make a better one through con- 
tinuous and professional contact. In the early stages after the sale 
mishap you may not see many referrals, but when they start to 
come through you'll know that your service recovery plan was a 

• If you can't turn the situation around, don't concede your profit. 

Some clients only feel placated if they get into your pocketbook and 
win cash compensation. If you did something that caused them to 
be hurt financially, you may have to buck up. However, agents rarely 
are the cause of a client's financial hardship. Before you give up your 
hard-earned money, I caution you to ask yourself three questions: 

1. Will offering cash really turn this client into a raving fan? 

2. Is there another way to turn this client into a raving fan? 

3. Is there a reasonable chance that I will win future business and 
referrals from this person? 

If your answers don't cause you to feel confident that giving up 
money will net a future return at a low risk, keep the cash in your 

Chapter 15: Keeping Clients for Life j(/ / 

Developing a service plan 

The best way to provide the level of service you and your client agreed on is 
to create two checklists, a new listing checklist that details the steps you will 
follow throughout the process of accepting a listing, and a sale agreement 
checklist that details all the steps that happen from contract to close. 

Figures 15-1 and 15-2 present samples of each of these checklists to guide you 
as you develop forms that work for your own business. Standard procedures 
vary from state to state and MLS board to MLS board. While the samples 
included in this book will be 90 percent accurate for your situation, you'll 
need to customize them to fit the requirements of your state, region, or local 
laws and code of ethics. 

Extra touches that create gold-star service 

Whole books have been written on the topic of 
customer service. For a great resource, pick up 
Customer Service For Dummies, 3rd Edition, by 
Karen Leland and Keith Bailey (Wiley). The 
basis for customer service in real estate is 
accomplishing a sale if you represent the seller 
or securing the right property forthe client if you 
represent the buyer. Short of doing those things, 
you won't have a customerto service. This seg- 
ment assumes you have done that and want to 
provide that little bit extra for your clients. 

Ask the agents in your office what extra touches 
work for them. Also, ask your broker what 
actions she thinks are considered extra touches. 
Following are two of my favorites — one that is 
extended right after the closing and one that 
is extended to long-term clients: 

i^* Right after closing, arrange for two hours 
of complimentary home repair work. The 

cost of this extra touch will run only about 
$100 and the perceived value is huge. More 
often than not, clients will use more time 
than the amount covered by your gift, and 
so the repairperson will acquire new clients 
and will probably give you a great deal on 
the time he sells to you as a result. 

By sending in a repairperson, you help the 
clients resolve small issues that the sellers 
didn't handle before they left. If these issues 
aren't dealt with, they may fester into some- 
thing bigger that leads to frustration with 
the transaction, which could lead to frus- 
tration with you. This idea is an inexpensive 
win-win for all involved. 

For long-term clients, consider buying four 
season tickets to an event series that you 
enjoy in your town — perhaps to the sym- 
phony or the theatre or to professional or 
college sports games. Be sure that the 
events are ones you enjoy attending and 
that the activity is consistent with your pro- 
fessional image. (Tickets to WWE wrestling 
probably won't make your list.) 

Shortly before each of the event dates, invite 
clients to attend the event with you. Don't 
issue invitations when you first buy the tick- 
ets. Wait until a few days or a week before 
each event. At that point your invitation will 
seem spontaneous and genuinely friendly. 
Some of your invitees will already be booked 
and will have to decline. You may have to call 
six to ten people to give the tickets away. 

j(/2 P art '^ : Running a Successful Real Estate Business 



Address _ 

Figure 15-1: 



checklist to 

reflect the 

steps you 

follow when 

acquiring a 

new listing. 

□ Take photo 

□ Put up and fill flyer box 

Within Two Days of Listing 
At the House: 

□ Make duplicate key 

□ Install lock box 

□ Place directional signs as needed 
In the Office: 

O Order sign up 

□ Submit listing to office for MLS input 

□ Fill in information on listing folder 

□ Log listing in current listing log book with copy of listing 

□ Obtain and keep: 

--Original lead-based paint disclosure 
-Property disclosure/disclaimer 
-LP siding claim, if applicable 
O Create Flyer 

□ Add property to Internet ad 

□ Add Client to database or change ID/Status to "Current Listing 

□ Communicate with sellers 
-Send thank you note 

□ MLS listing 

D Copy of all their listing forms 

D Listing agreement 

□ Send "Just Listed" cards 

□ Check listing in MLS for accuracy 

□ Place home on Office Tour 

□ Sellers agency disclosure 
O Property disclosure or disclaimer 

□ Lead-based paint disclosure 

Confirm . 
Confirm . 

□ Place home on Realtor's Tour _ 

□ Include listing on Pre-Scheduled Ad form 

Date Toured 
Date Toured 

In the Future 

□ Keep track of showings □ Send copies of ads to clients 

□ Track when and where ads run □ Follow up with agents 

□ Keep copies of ads on file □ Follow up with clients 

Chapter 15: Keeping Clients for Life ^Oj 


Figure 15-2: 



checklist to 

reflect the 

steps you 

follow from 

contract to 


Close Date_ 



Sales Price 

Property Sold 

Open Escrow 

□ Complete sales transaction sheet 

□ Complete earnest money agreement. 

Submit □ Original (listing side) or □ Copy (buyer's side) to office administrator. 
□ Send originals to listing agent, if applicable 

□ Earnest money$ □ Note □ Check Held by: 

□ Complete buyer/seller agency disclosure forms. Submit original to administator. 

□ Submit "Sale Pending" addendum to the office 

□ Send copy of property disclosure to o Seller o Buyer 

□ Receive fully signed property disclosure 

Submit □ Original (listing side) or D Copy (buyer's side). 

□ Note deadlines in calendar. 

□ Record information on agents, lender, escrow, and buyers or sellers on file folder. 

□ Send escrow letter to clients with copies of their paperwork. 

□ Send copy of earnest money agreement and preliminary title report to lender 

□ Print copy of MLS (if representing the buyer) 


□ Check the MLS to make sure the property is listed as "Pending" 

□ Schedule inspections/appraisals: 

Inspection date Completed 

Appraisal date Completed 

442 Completed 

□ Receive copy of preliminary title report. 

□ Review preliminary report 

□ Note concerns on transaction file 

□ Schedule follow-up to resolve concerns priorto closing 

□ Removal of Contingencies 

□ Home sale/close. Date to be removed: 

□ Financing: Date to be removed: 

jOll Part IV: Running a Successful Real Estate Business 

Figure 15-2: 


□ Lender Arrangement 

□ Loan Application: Completed . 

□ Credit Report: Completed 

□ Verification of Deposit (VOD): Completed 

□ Verification of Employment (VOE): Completed 

□ FICO Score: Completed 

O Loan Documents: Ordered 

□ Put up sold sticker 

□ Request copy of closing statement prior to closing. Review Go with seller or buyer 

Sale Closes 

□ Receive Paycheck 

□ Deliver keys to buyers 

□ Order post sign down 

□ Submit "Sold" addendum to office. 

□ Update buyers and sellers information in database to "Past Clients" category 

□ Send thank you note to seller and/or buyer 

Following the Closing 

□ Contact past client one day after closing of escrow to ask for referrals 

□ Contact past client three days after closing of escrow to ask for referrals 

□ Contact past client seven days after closing of escrow to ask for referrals 

□ Prepare closing statement letter 

□ Contact past client 30 days after closing of escrow to ask for referrals 

Commission Due . 

(Processing Fee) = 

***Remember to follow-up weekly with lenders and agents* 

Chapter 16 

Maximizing Your Time 

In This Chapter 

Steering clear of time-wasting activities 

Putting an end to procrastination 

Generating the greatest return on time you invest in your business 

The most significant challenge in an entrepreneurial business like real estate 
sales is managing time effectively. The daily battle against procrastination, 
distractions, interruptions, low-priority activities, and ingrained customer 
expectations of instant accessibility can exhaust even the most energetic 
agent and can derail the plans of all but the most disciplined time manager. 

This chapter helps you to take control of your calendar, which will give you 
the time you need to build skills, prospect, follow up with leads, plan and 
make quality presentations, market properties, and position and present 
yourself successfully. Your ability to manage your days and invest your time 
for the highest return will separate you from the other agents who are vying 
for top-producer status. Not to mention that managing your calendar also 
enables you to earn your desired income. 

Spending Less Time to Accomplish More 

Many real estate agents invest too much time and too little intensity in their 
businesses. They commit well over 40 hours a week to the job and they put 
themselves on call seven days a week. They spread themselves thin and then 
in order to sustain themselves over this endless schedule, they dilute their 
intensity. Few other professionals work so many hours. Even doctors have a 
lighter on-call schedule than most agents choose to accept. 

I suggest that you commit right now to becoming more effective while work- 
ing way fewer hours each week. Consider this advice: 

3 v O ' >art '^ : Running a Successful Real Estate Business 


«-" Set aside at least one day a week to recharge and refresh yourself. 

Before you say you can't afford the day off, realize this truth: Work 
expands to fill the time you give it. Reduce your work hours appropri- 
ately and you'll automatically be forced to squeeze more productivity 
into shorter spans of time. 

*«* Increase your productivity by increasing your intensity. Give yourself 
deadlines with no option for procrastination. If you know you need to 
accomplish a lineup of goals over the course of a five-day workweek, 
your focus will automatically zoom in, you'll sweep away distractions, 
and you'll get the job done in the time allowed. 

I watched my own focus and productivity intensify as I went from a 
seven-day workweek to a six-day workweek to a five-day workweek. The 
largest production increase I experienced, though, was when I moved to 
a schedule of four days of work followed by three days off. I experienced 
no correlating reduction in my income or success objectives during this 
transition. How'd I do it? Given my goals, I knew I had to work with 
incredibly high intensity and could allow no options for procrastination. 
What's more, I couldn't change my mind and add a workday to my 
schedule because my wife and I were constructing a vacation home 
some three hours away in Bend, Oregon, and we had to be on-site every 
Friday to check the progress. Joan was the general contractor, so reorga- 
nizing the eight-month construction schedule was impossible. You want 
to know the most amazing outcome of the situation? Once the home was 
done, I saw no need to revert to a five-day workweek. 

u* Take away your time-wasting options. Commit to taking time off and 
working during established, reasonable work hours. Automatically, 
you'll force yourself to eliminate time-wasting activities like too much 
socializing in the office or lunch with people trying to sell you their 

**" Give yourself no option to add hours back to your workweek. If you 

allow yourself the option to add time back to your workweek, you leave 
yourself open to time-wasting choices. 

u* Begin treating time as your most valuable asset. Real estate agents 
tend to be too casual with their time, which leads to career, relationship, 
or bank account casualties that could've been avoided by treating time 
as the most precious resource in their life. 

A resource is something that's available in a limited or finite supply. 
Money and energy are among your personal resources, but time is your 
most precious resource of all. You can judge your resource supply in all 
other areas. You know, or can easily figure out, how much money is in 
your bank account. You know or sense your energy levels and what you 
have left to use. 

Chapter 16: Maximizing Your Time j\)( 

Applying Pareto's Principle: 
The 80:20 Rule 


In the late 1800s, an Italian economist named Vilfredo Pareto observed that in 
Italy a small group of people held nearly all the power, influence, and money, 
which they used to create a significant advantage over the rest of the popula- 
tion. He theorized that in most countries about 80 percent of the wealth and 
power was controlled by about 20 percent of the people. He called this a 
"predictable imbalance," which eventually became known as the 80:20 rule. 

Throughout the 1900s, researchers realized that the 80:20 rule applies across 
many fields of expertise. Most certainly, it's true when it comes to time 
investment, and here's what that means to you: 

W 80 percent of your results will be generated by 20 percent of your 
efforts. Conversely, 20 percent of your results will be generated by 80 
percent of your efforts. In other words, one-fifth of your time-consuming 
activities will deliver four-fifths of your gross sales or gross commissions. 

*«* You can increase the productivity that results from your time investment 
by assessing which activities achieve the highest-quality results. Too 

I many agents allow their time to be consumed by activities that generate a 
mere 20 percent of their revenue. The moment they shift their time invest- 
ment into higher-return activities, they see dramatic income results. 

The 80:20 rule holds true across a spectrum of life activities. Whether you're 
investing in your career, relationships, health, wealth, or personal develop- 
ment, 20 percent of your efforts will deliver 80 percent of the results you 
seek. The secret is to figure out which activities deliver the highest-quality 
returns and to invest your time accordingly. 

As a real estate agent, do you make time for the few activities that return the 
most significant results? Or are you, like most people in the world, giving 
your time to the time-gobbling 80 percent of activities that deliver a meager 
return? Top performers in nearly any field quickly discover which actions 
account for the great majority of results and they weight their time toward 
those activities, performing them with great regularity and intensity. 

Making time for the things 
that impact your success 

Everyone would be making big money in real estate sales if controlling time 
and gaining discipline to invest hours in better, higher-value activities were 
easy. However, facts prove otherwise. On average, newer agents make less 

j(/0 P art '^ : Running a Successful Real Estate Business 

than $20,000 a year. These low-income statistics correlate with poor time- 
allocation choices. 

To allocate larger amounts of time to success-generating actions, follow what 
I call The Four Ds: 


1. Decide that your time management skills, habits, and activities are 
going to change. 

This is a challenging first step for most people because changing a behav- 
ior, such as time usage, isn't easy. To avoid change, people search around 
for solutions that allow them to keep doing what they've always done. In 
doing so, they waste yet more time by wavering between the change they 
know they must face and the hope that they won't have to face it. 

I believe that the biggest waste of time occurs between the moment 
when you know you need to do something and when you actually set out 
to do it. That's why you need to make an immediate commitment to 
change your time management patterns and habits. 

2. Define what needs to change. 

This step involves two phases. First you have to determine the specific 
activities that are causing you to waste time or sacrifice productivity. 
Then you have to figure out how you can remedy the situation. 

For example, say you need to get to your office earlier each day because 
you'll spend less time in traffic and, well, you're just more motivated and 
focused in the morning. To accomplish this goal, you may need to go to 
sleep earlier each night and find child care for an extra hour in the morn- 
ing. Or maybe you need more prospecting or lead follow-up time. This 
may mean that you need to turn off your cell phone to minimize distrac- 
tions when you're trying to undertake these activities. 

3. Design a time management plan. 

Get proactive rather than reactionary. Typical day planners and PDAs 
(personal digital assistants) are reactionary time management tools. 
They allow you to schedule time for client needs, appointments, and lim- 
ited activities, but they don't help you take control of time for your own 
priorities and purposes. You need to do that part on your own. 

To master your time, you need to adopt a time-blocking system that dedi- 
cates predetermined periods of time to your most valuable activities. (See 
the upcoming section, "Time Blocking Your Way to Success" to discover 
time blocking in detail.) The key point is that you can't leave your days 
vulnerable to the time needs of others. You must block out periods of time 
for your own most important activities. Otherwise, you risk giving your 
days away to the appointment or time requests of clients and colleagues, 
leaving you with no time for your own needs. No wonder so many agents 
feel burned out and as if they're being pulled like taffy by others. 


Chapter 16: Maximizing Your Time j(/y 

Early to bed, early to rise. . . 

I worked with a client a few years ago who had 
difficulty getting into the office early enough to 
begin his day. We tracked his difficulty back to 
the fact that he was going to bed too late to be 
able to reach his office consistently by 8 a.m., 
which is when he needed to start his day. 

We further determined that he needed a set 
amount of time in the evening to have dinner 
with his family, play with his children, and have 
time with his wife before their bedtime. He 

needed to be home from work by a certain hour 
for all of this to happen efficiently and consis- 
tently for him. 

Once he made the necessary changes, by 
coming in earlier and leaving the office on time, 
his income shot up dramatically. His quality of 
life with his children and wife skyrocketed as 
well, all the result of defining the problem, 
designing a solution, and managing time 


4. Just Do it! 

Don't wait until you've analyzed every aspect of every problem and 
designed the absolutely perfect solution to take action. Waiting only 
results in unrealized income, unfulfilled potential, and limited wealth. 
Instead, just do it. Decide what to change, define how to change it, and 
design a time management plan that allows for change. 

Weiqhtinq qow time to what matters 

No real estate agent will argue with the fact that the activities of prospecting, 
lead follow-up, listing presentations, buyer interview presentations, showing 
property, and writing and negotiating contracts account for the greatest 
results in real estate sales. I call these tasks your direct income-producing 
activities, or DIPA. 

Following is the list of the half-dozen important activities that I share with all 
of my real estate coaching clients: 

t-" Prospecting 

u* Lead follow-up 

u* Listing presentations 

u* Buyer interview presentations 

u* Showing property to qualified buyers 

v* Writing and negotiating contracts 

3 / v P art '^ : Running a Successful Real Estate Business 

Time management can earn you money 

I have a coaching clientin Eugene, Oregon, who 
doesn't have a big team of buyers' agents or 
administrative staff. In fact, she works on her 
own with one administrative assistant. However, 
through her small-scale operation she achieves 
higher production growth, income, sales 
volume, quality of life, and net profit than prob- 
ably any agent in North America. 

In 2004, she increased her income by 119 per- 
cent, and then experienced another 42 percent 
increase in 2005 — or an average annual 
income increase of 80 percent over the two 
years. Her success story goes well beyond 
incomefigures. Other agents have had similarly 

large production increases, but the difference 
with my coaching client is that she works an 
average of 42 hours a week. She nei/erworks 
weekends, takes at least one three-day week- 
end a month, and takes more than four weeks 
of vacation a year. 

Her secret? She spends 80 percent of her time 
in DIPA activities. I know because she tracks 
and shares hertime allocation with me. Hertime 
management is the number one reason for her 
income, quality of life, and wealth. She's a living, 
breathing testament to the statement, "It's not 
how many hours you work but what you do in 
the hours you work." 

If you dedicate yourself to the above six activities, you'll see high returns on 
your time investment. I've studied the time allocation of agents for more than 
15 years. I know for certain that on average real estate agents spend fewer 
than two hours a day engaged in the activities on this list. Instead, they work 
long hours, often putting in more than ten hours a day, and spend 80 percent 
or more of their time on activities that generate less than 20 percent of their 
revenue. Flip the principle to your advantage. Begin spending more and more 
of your time on the activities that are proven to deliver results, and refuse to 
be crushed by the weight and waste of those that don't. (Low production 
activities are basically anything that is administration based. Mailing, stamp- 
ing, filing, writing ads, creating flyers, and even processing transactions to 
close all are activities that are low-production and don't directly produce rev- 
enue. At best, they support the production that has already been done.) 

I have no doubt (and neither will any other agent) that if you invest more 
time in DIPA activities you'll dramatically increase your income and probabil- 
ity of success. 

Invest the bulk of your time in direct income-producing activities. Committing 
your time to tasks that deliver results is the easiest, quickest, and most prof- 
itable way to earn big bucks in real estate sales. 

Focusing on income-producing activities 

In order to achieve success, any newer agent must commit a minimum of 15 
hours a week to DIPA. That means you need to dedicate 15 hours every single 

Chapter 16: Maximizing Your Time jff 

week — three hours every day — to prospecting and lead follow-up. If you do 
that, you assure your success and income. Fail to do so and your success will 
be in question. 

Don't cheat by trying to replace DIPA tasks with what I call IIPA tasks, or indi- 
rect income-producing activities. IIPA tasks include things like making client- 
development marketing pieces, producing direct mailings, creating or fiddling 
with your Web site, optimizing your search engine placement, publishing 
hardcopy or e-mail newsletters, and a near-endless list of other efforts that 
agents invest in to indirectly produce income. 

The problem is that IIPA activities are difficult to control in terms of the time, 
effort, energy, and dollars they require, and they're almost impossible to mea- 
sure in terms of outcome. Often, countless hours result in pieces that go 
straight to the trash bin or are deleted with a single keystroke. 

Indirect marketing efforts result in a high quantity of contacts. Direct market- 
ing efforts result in high-quality contacts — and sales success is the result of 
quality rather than quantity. 

Aim to spread your time between DIPA and IIPA tasks on at least a four-to- 
one ratio: For every hour you spend in IIPA, spend at least four hours in DIPA. 
Veer from that ratio and you'll risk dramatic income swings instead of achiev- 
ing consistent revenue growth. 

Addressing the challenges of completing production-support activities 

Agents spend an undue amount of time on production-supporting activities, or 
PSA. These activities include all the steps necessary to support such direct 
income-producing activities as prospecting, lead follow-up, taking listings, 
and making sales. You can't avoid the administrative functions that support 
your sales and customer service efforts, but you can and should handle them 
in the fewest number of hours possible. Here's how: 

u* Handle PSA tasks in dedicated blocks of time so they don't eat away at 
your whole day. Errands, MLS searches, MLS input, home flyer creation, 
filing, copying, faxing, meeting home inspectors or appraisers, getting 
feedback from showings, and purchasing supplies are only a sampling of 
the necessary tasks that support your production efforts. Keep a list of 
PSA tasks that need to be done and block time to do all of them at once 
rather than periodically throughout the day. This will cut back on the 
constant number of interruptions that slow down your workday. 

w* Realize that PSA tasks produce little new revenue, so don't let them take 
over your day or you'll never get to income-producing efforts. I know of 
agents who take a whole day or even a whole week of time to work on the 
tasks that support their deal. Yes, deal, as in one! This is a superb example 
of procrastination. Get your support work done quickly so you can invest 
the bulk of your time to finding and working on the next deal. 

jl 2 P art '^ : Running a Successful Real Estate Business 

The pouter of the 11 a.m. rule 

The 11 a.m. rule goes like this: The world around a real estate agent gears up 
at 11:00 each morning. The attorneys, title officers, loan officers, other agents, 
appraisers, home inspectors, repair contractors, and clients will most likely 
call you after or close to 11 a.m. Because of this, you need to come into the 
office early and complete your prospecting and lead follow-up before the 
clock strikes that hour. 

I even suggest the extreme approach of not answering your phone until 1 1 
a.m. in order to minimize the chance of being distracted during your most 
important production hours. 

Dealing With time-consuming fires 

Time-consuming fires are the hot issues that result from the emotional tur- 
moil involved in many real estate transactions. Sometimes they require you 
to stay calm and cautious; other times you need to put on a firefighter's hat 
and start dousing the flames of a delayed closing, an emotionally frustrated 
buyer or seller, a problem co-op agent, or a slow moving inspector, appraiser, 
or loan officer. Let the following rules guide your responses: 



is* Rule #1: Closing issues can always wait an hour. When your transac- 
tion hits a snag, don't let it dramatically change your day's schedule. 
Wait to resolve the issues during the time you've blocked for administra- 
tive tasks. 

is* Rule #2: A frenzied reaction only adds fuel to the fire. More often than 
not, when one closing party gets riled it's because someone else in the 
transaction is riled — and hysteria is catchy. Aim to serve as the calming 
influence in the transaction. If the problem arises two hours before your 
predetermined administrative time slot, calmly inform the parties that 
you have prescheduled appointments that you can't change, but that 
you'll be able to take action when you get out of the appointments in 
two hours. 

is* Rule #3: Fires often burn themselves out. Rather than jump into the 
mess, give the issue a bit of time to simmer down. Remember that your 
prospecting and lead follow-up tasks are appointments to which you've 
committed. Sticking to your daily plan may give the issue time to cool or 
even resolve itself. 

i^ Rule #4: Don't wait for a three-alarm fire to call for the pump truck. If 

the fire becomes too hot to handle, suit up your broker right away. 
Before the transaction flares out of control, ask for help. The longer you 
delay, the more effort you'll spend getting the situation cooled down. 

Chapter 16: Maximizing Your Time 3*3 

Time Blocking \lour Way to Success 

A time-blocked schedule reserves and protects slotted time segments for 
preplanned and predetermined activities. The objective of time blocking is 
to increase the amount of time you can invest in direct income-producing 


In more than 20 years as a business owner, I've yet to run across a more reli- 
able method for seizing control of time and boosting productivity than time 

Many people have heard of time blocking, but few master its use. The chal- 
lenge isn't in creating the schedule; that's the easy part. The challenge is 
staying on schedule. This is the difficult part because most people set their 
time-blocking expectations very high, reserve large portions of time, and 
then can't maintain the schedule. 


Setting qow schedule in time blocks 

Efficient time blocking starts with a schedule grid. See Figures 16-1 and 16-2 
for a blank grid and sample to follow. In the beginning, create a grid that 
breaks your schedule down into 30-minute segments. As your skill pro- 
gresses, you may shift to a 15-minute grid format. 

As you complete the grid, I strongly suggest that you block your entire daily 
schedule, including personal time, not just your workday. Follow these steps: 

1. Block time for your personal life first. 

If you don't, you'll be hard pressed to squeeze in personal time after 
scheduling everything else. Decide what the most important personal 
activities in your life are and block them out before you allow any other 
obligations onto your calendar. Set aside a date night with your spouse 
or partner. Block time for working out, quiet time, prayer time, personal 
development time, and family time. If your daughter has soccer games 
on Tuesday and Thursday evenings, put those in your schedule. If some- 
one wants to see you during those times, tell them you're booked with 
previous appointments. 

For my personal schedule, I reserve a weekly date night with my wife, 
Joan. I block workout times and set 30 minutes daily of floor time — time 
to play on the floor with my four-year-old son, Wesley. I set aside Friday 
mornings for breakfast with my family. 

2. Decide which full day you will take off each week. 

3 7 4f P art '^' Running a Successful Real Estate Business 

Figure 16-1: 

Use a 


grid such as 

the one 

shown in 



to block 

your time 

and manage 

your day. 





























































Chapter 16: Maximizing Your Time j 1 f} 

Figure 16-2: 

how a 
grid may 















































1 ^ 

2 | 














































™ E 


































































1 1 






























































2 E 


































































1 1 



























































c E 

^ i 



























































l ^~ 










































Part IV: Running a Successful Real Estate Business 


No ifs, ands, or buts. You must take at least one day off. The reaction of 
new agents is, "Oh! I couldn't do that." Give me a break. God even took 
the seventh day off. 

A few words on the definition of a day off: It means no real estate calls, 
no answering your cell phone, no negotiating offers, no taking ad calls, 
no taking sign calls, and no meeting with clients or prospects. The 
minute you do any business activity, it's a workday, even if you only 
work for five minutes. Honor yourself and your family with one day a 
week away from real estate. The 24/7 weekly approach to the real estate 
business leads to family frustrations and burn out. Try receiving the love 
you need from a pile of money. 

3. Decide which evenings you will and will not work. Again, set bound- 
aries. I suggest that you make no more than three or four nights a week 
available to clients. Designate them during the time-blocking stage and 
then move prospects only into those evening time slots. I limited my 
own evening work to Tuesdays only. Every other night of the week my 
wife could expect me home for dinner no later than 6:30 p.m. if I had a 
5:15 p.m. listing appointment. 

4. Begin blocking time for direct income-producing activities. 

• Block time for prospecting and lead follow-up first and preferably 
early in the day. I know what you're thinking, "Aren't more people 
home in the afternoon and evening?" Yes, probably so. But will you 
prospect consistently when you have to do it in the evening? After 
nearly two decades in real estate, I know for a fact that the answer 
is no. The fact that more people are home at night doesn't matter if 
that's not when you're picking up the phone to call them. Schedule 
calls for morning hours when you can and will actually make the 
contacts. (See Chapter 5 for more prospecting tips.) 

• Schedule time slots for appointments next. Determine how many 
appointments you need to hold and how long they need to run. For 
example, how long do you need for a listing presentation? How 
much time do you need to show a buyer homes in a specific area? 

I scheduled appointment slots in one-hour increments, which 
worked because after my second year in the business I didn't work 
with buyers. When you work with buyers, you need to plan on 
longer-lasting appointments. With sellers, I figured that my typical 
listing presentation lasted about 30 to 45 minutes. The hour block 
gave me at least 15 minutes of drive time to reach my next appoint- 
ment. I scheduled appointments in the afternoons at 3:15, 4:15, and 
5:15, Monday through Thursday. Tuesdays I worked late, and I 
scheduled appointments at 6:15, 7:15, and 8:15. Whenever I didn't 
have a 5:15 appointment, I transferred that block to prospecting 
time so that I could catch up with people after work. 

Chapter 16: Maximizing Your Time 3'/ 

Once you block appointment slots, you know exactly when to ask 
people to meet with you. You can imitate a doctor's nurse or den- 
tist's receptionist, saying, "I have an opening at 5:15 p.m. on Tuesday 
or 4:15 p.m. on Wednesday. Which would be better for you?" 

5. Schedule time for administrative tasks. 

Make a list of your regular, necessary activities, such as phone calls, 
office meetings, and company tours, and put them into your time 
blocked schedule. 

6. Finally, block some flextime. 

Flextime helps you to stay on track. It allows you to put out fires, make 
emergency calls, handle unscheduled but necessary tasks, and still stay 
on your schedule. 

As you start out, block about thirty minutes of flextime for every two 
hours of scheduled time in your daily grid. You can always reduce or 
remove the flextime blocks as your skills and discipline increase. Most 
agents who are new to time blocking create schedules that are too rigid. 
The lack of flexibility causes them to be off their schedules before 10:30 
in the morning. When they get off schedule early, they're then off sched- 
ule for the rest of the day. 

Time-Mocking mistakes to block out 

Sales professionals in the top 10 percent of their industries share a common 
trait: They control, use, and invest their time more wisely and effectively than 
their lower-performing associates. Among sales professionals, time usage 
determines income. 


The most significant challenge for most sales professionals is time control. 
Through years of study and coaching sales professionals, I've compiled the 
following list of challenges that most sales people experience when trying to 
master their time-block schedule. 

Making yourself too available 

The biggest error that sales people make is getting sucked into the interrup- 
tion game. You need times in your schedule that are free of interruptions, 
during which you bar access to all but those to whom you grant exceptions. 
Follow this advice: 

u* Use an effective gatekeeper to screen your calls. Have the gatekeeper 
redirect all minor issues, problems, challenges, and interruptions that 
can be handled by an assistant or some other person. 

u* Limit the number of people who have unfiltered access to you. Create 
a short list of the few important people who can interrupt your schedule 

3 7 O P art '^ : Running a Successful Real Estate Business 

at any time of the day, and don't let anyone else in during time blocked for 
interruption-free activities. My short list includes my wife, my father, my 
attorney, and a few key associates. Period. As you make your own list, 
include only those who are extremely important to your personal life. Very 
few clients find their way onto the short lists of truly successful people. 


Choosing the Wrong office location and setup 

The nature of your physical office has a dramatic effect on your time manage- 
ment and productivity. Give serious consideration to the following two issues: 

u* See that the size of your work environment matches the size of your 
practice. If you don't have enough square footage for yourself and your 
staff, your production will be stunted. 

I had a coaching client a few years back who worked out of 150 square 
feet of office space with three associates. Amazingly, even as they were 
tripping over each other, they managed to do 150 transactions a year. 
However, when they moved into a new 500 square-foot office, they 
watched their production soar. Each team member could control time 
better, limit interruptions, access files, and hold meetings. The expanded 
space allowed for an increase in discipline, talent, skill, and production. 

Don't let your physical space limit your growth opportunities. If you're 
crowded by your staff, you're in the wrong physical location. 

v* Your personal office must be private. Top-producing agents need to do 
too many focused activities in a day to be in the bullpen of activity. If 
you're surrounded by the buzz of staff members, inbound phone calls, 
problems, and challenges, it's easy to be tempted to jump in and help, 
tackling the service issues at the expense of new business creation. The 
only way to control your planning and prospecting environment is to 
house your practice in a private office away from distractions and staff. 

Failing to operate on an appointment-only basis 

Too many agents are willing to meet at all hours of the day and night and on a 
moment's notice. By time blocking, you can create appointment slots and drive 
prospects into those slots, just as your doctor, dentist, or attorney does. 

Studies show that 80 percent of all prospects are willing to fit into the schedules 
of their professional advisors. But when prospects aren't alerted to an advisor's 
schedule, they take control on their own, dictating the appointment time and 
leaving an agent like you juggling your schedule to adapt to their needs. Real 
estate agents accept this knee-jerk scheduling approach as a necessary aspect 
of a service-oriented business — as if total availability equals service. 

Operate as a professional on an appointment-only basis. Schedule all appoint- 
ments during time-blocked periods when you know you'll be available, 
focused, and uninterrupted by any issue other than the one your client is 

Chapter 16: Maximizing Your Time 3 / • 

Boviina to distractions 

Real estate sales is among the most interrupted and distracted professions 
on the face of the planet. Agents are distracted by the constant jangle of desk 
phones, home phones, and cell phones. 

If the phone isn't ringing, you have the distraction of e-mail, which usually inter- 
rupts you with some unsolicited miracle offer or, less often, with a new lead 
opportunity Here's a tip: Don't derail your day just because your computer tells 
you that you've got mail. The conversion ratio of Internet leads is less than 1 
percent. If you're engaged in productive activities, don't stop what you're doing 
for a 1 percent opportunity. Control distractions following this advice: 

u* Block time in your day for the distractions you know you'll encounter. 

If you want to socialize with other agents, plan a set time to do that. Just 
remember to keep the coffee klatch short and within the time you allot- 
ted for it. 

u* Create a list of no more than five people that are granted instant 
access during your workday. Have your assistant memorize the names. 
If you don't have an assistant, work with your receptionist so that only 
those few people are granted unfiltered access. 

Kitting the Time Kilter 
Catted Procrastination 


The number one obstacle between real estate agents and higher production 
is interruptions. A close second is procrastination. 

Procrastination is the direct result of a lack of urgency to do what needs to be 
done and to do it now. Urgency is directly linked to success. You can increase 
your output by about 30 percent if you work with urgency in mind. 

My friend Brian Tracy shared with me years ago the law of forced efficiency. 
This law is based on the premise that you never have enough time to do 
everything you want or need to do, but that in every day you can always find 
enough time to accomplish the most important tasks. Obviously, you won't 
get to the most important tasks if you're bogged down with tasks of low 
importance (which could easily wait until later). Nor will you get to the most 
important tasks if you procrastinate. 

Once you set your priorities, take action without procrastination by following 
these two pieces of advice: 

j2(/ P art '^ : Running a Successful Real Estate Business 

f" Limit the time in which you can get the job done. Too much time to 
complete work can lower urgency and lead to procrastination. By identi- 
fying days off and time off, you raise the efficiency and effectiveness of 
your production on the days you're working. 

*«* Give yourself deadlines. Have you ever noticed how much gets done 
when you're leaving on a vacation in a day or so. I've seen people double 
or triple their work output in the days leading up to a vacation. What if 
you operated every day at that pace and urgency? By setting deadlines 
that encourage urgency, your income and quality of life would explode 
to heights you never imagined. 


Moring forward With a clear Vision 

A good deal of procrastination results directly from a lack of clear vision or 
clarity about what to do. If you don't know what you want, you can't possibly 
achieve it. You won't likely hit a target that you can't see. 

Clarity of purpose kills procrastination, yet fewer than 3 percent of all people 
define and write down their life goals. 

If you haven't written down your own life goals, answer these questions: 

v* What do you want to be? 

*«* What do you want to do with your life? 

v* What do you want to have? 

u* Where do you want to go? 

I know you want to be financially independent. Otherwise, you wouldn't be in 
real estate sales. But what does financial independence mean to you? How 
much money do you need to live the lifestyle you dream about? The famous 
success motivator Napoleon Hill expresses the importance of identifying 
your goal when he says: "There is one quality that one must posses to win, 
and that is definiteness of purpose . . . the knowledge of what one wants and 
a burning desire to achieve it." 

Clarify your desires in life. Once you're certain about what you want to 
achieve, you'll find it far easier to set and follow an action plan that isn't 
hindered by procrastination. 

Knowing your objectives 

You'll set annual goals, of course. But also view each day that you work or 
play in terms of daily objectives. What do you want to accomplish today? 
What big-picture results do you want to achieve by day's end? 

Chapter 16: Maximizing Your Time j2 1 


I coached a young real estate agent, in Portland, Oregon. He had a high sense 
of urgency to succeed but struggled with establishing the plans and objectives 
necessary to achieve his goals. In 1998 he wanted to make $250,000 in income. 
He was less than a third of the way to his goal when we began working together 
in July of that year. Then, over the next five months he closed deals for another 
$175,000! The key was setting a daily objective. Each morning he asked and 
answered the question: Who has the highest probability of buying or selling 
today? Then he focused single-mindedly on those prospects. 


Setting your priorities 

Your priorities are the most important actions or steps you must take in 
order to achieve your objectives for the day. Objectives and priorities aren't 
one and the same. Objectives are results you intend to achieve and priorities 
are steps you must take to achieve success. 

By prioritizing the importance or value of the tasks on your to-do list, you 
greatly increase the probability that you'll be motivated to overcome pro- 
crastination and get the job done. 

Most people go about creating task lists in the wrong way. They write down 
all of the things that they must do each day and then go to work, proudly 
ticking off items as they're completed. These people equate their level of suc- 
cess with the number of items they check off their list. Success, however, 
doesn't result from how many things you get done. It results from getting the 
right things done. In other words, you need to know your priorities. 

Following is an outline for the prioritization system I've used with success for 


1. Create your daily task list as you normally would. 

Don't think at all about what is most important. Just think about what 
needs to get done over the course of the day. Put yourself in brainstorm- 
ing mode and get your thoughts down on paper. 

2. Once you have your list, create task categories. 

You're not prioritizing during this step. This isn't about what to do 
first, second, or third. All you're doing here is sorting tasks into these 

A. You'll suffer a significant consequence if you don't complete these 
tasks today. Even if you have to work all day and all night, these 
items must get done. 

B. These tasks trigger a mild consequence if they aren't completed 
today. You probably wouldn't stay late in order to finish them. 

C. These tasks have no penalty at all if they aren't done today. 

3^? 2 P art 'V: Running a Successful Real Estate Business 



D. These tasks can be delegated. They involve low-value activities 
that could be performed by someone who has a lower hourly 
dollar value than you. 

E. These tasks can and should be eliminated. They probably made 
their way onto your list out of tradition or habit. They aren't neces- 
sary, so you need to figure out how to get them off the list. I call it 

My friend Zig Ziglar tells a story of a little boy who asks his mother 
as they're preparing a holiday meal why she cuts the ends of the 
ham. She says, "I don't know. My mother always did it this way." 
Now this four-year-old boy said, "Let's call Grandma right now and 
find out why." So they call Grandma and ask why she always cut 
the ends off the ham. Her reply: Her roaster was too small! 

3. Once your list is categorized, prioritize the tasks. 

Begin with your A category and determine which item deserves A-l 
status. Follow by designating A-2, A-3, A-4, A-5, and so on. Then repeat 
the process for the B, C, and D categories. Go to work in the order of 
these priorities and you'll be amazed at how much you can accomplish 
in less time than ever and without falling into the procrastination trap. 

As you master the art of prioritizing, expect to see fewer cross-offs or check- 
marks on your task list because you'll complete fewer activities. However, 
they'll be the more important activities — and quality comes before quantity 
in this case. 

Every day that you achieve closure on all your A-category items, consider 
yourself a terrific success. If you complete your A items every single day this 
year, I guarantee that you'll see your production and income explode. 

Giving yourself deadlines and reu/ards 

Human instinct makes us move away from pain and toward the pleasures of 
life. That's why you have to link deadlines with rewards if you want to keep 
yourself motivated to complete your work in a consistent way. Without a 
reward, it's darned difficult to face the rigor of a complex task. 

Each day when you set your objectives and priorities, set deadlines as well. 
Then link completion of your tasks with a clearly defined reward. 

For example, set a deadline to get all your prospecting and lead follow-up 
calls done by 10:30 a.m., and then reward yourself with a trip to your favorite 
coffee shop or lunch restaurant. Beyond daily rewards, promise yourself that 
if you meet your deadlines and complete all your priorities for a full week, 
you'll reward yourself with a massage, facial, or special evening out. 

Chapter 16: Maximizing Your Time 3^*3 

What's an hour of your time worth, anyway? 

Your hourly rate, or hourly value, is one of the 
most important numbers in your life, yet only 
one out of a hundred real estate agents can say 
what their time is worth. Ask members of a real 
estate agency's administrative staff and you get 
the answer down to a penny. They know exactly 
what they're paid on an hourly basis. Your 
broker manager, who's on salary, can answer 
the question as well. And certainly most people 
in the world around you, including your clients, 
can tell you what an hour oftheirtime is worth. 
It's time that you get with the program! 

Most respected professionals, including doctors, 
dentists, accountants, or attorneys, fundamen- 
tally sell time for a price. The highertheir profes- 
sional skills and the greatertheir reputations and 
success levels, the more they're able to increase 
their hourly rates in order to earn even more 
income. A successful attorney can decide to 
charge $300 an hour instead of $225. A dentist 
can decide that a gold crown will cost a patient 
$1,200 instead of the former $900 price tag. 

Unfortunately, as an agent, you can't simply 
decide to start charging, say, an 11 percent 
commission rate ratherthanthe rate that is con- 
sidered normal in your marketplace. But you 
can raise your income and the value of each 
hour invested in your business by increasing 
your productivity. 

To calculate your hourly value, follow these 

Hours worked per dayx days worked per 
week x weeks worked per year = total 
hours worked 

Gross commission income + total hours 
worked = hourly rate 

Calculate the gross commission income 
you earn in a year by either asking your 
broker or adding all the transactions and 
multiplying it by your commission rate. If 
you're a new agent, use your income goal 
instead of your actual gross income. 

If you're a full-time real estate agent, you prob- 
ably work somewhere between 2,000 and 4,000 
hours. If the number is closer to 4,000, then I'm 
safe to wager that your hourly rate is very low. 

I've met with agents who make $400,000 a year 
by basically working round-the-clock, but it 
turns out that their hourly value barely reaches 
$100 an hour. Other agents limit their work hours 
and maximize productivity, earning hourly rates 
well over $1,000 an hour — that's better than a 
surgeon's rate! 

To raise your hourly rate, raise the productivity 
of each hour you invest in your business. 

Watch your hourly value as a key indicator of 
your business success. Use your current hourly 
rate as a current benchmark, and then set a 
goal to double, triple, even quadruple the value 
you wring out of each hour. 


Realize these two truths about rewards: 

*<* You have to give them to yourself. Don't expect to receive them from 
your broker, clients, prospects, staff, or even family 

j2u P art '^ : Running a Successful Real Estate Business 

f" You have to set interim goals to keep yourself moving forward on a 
consistent basis. If your reward for yourself is financial independence, 
your payoff may not arrive for 10 or 20 years. That's way too long to wait 
for a pat on the back. 

Sales involves high pay, for sure, but also a fair amount of rejection and dis- 
couragement in between. Rewards encourage you to do the things you know 
you should do even when you don't feel like doing them. 

Carpe Diem: Seize \lour bay 

One of the most identifiable characteristics of high performers is that they're 
action-oriented. They don't wait around to see what will happen or how 
things will turn out. They seize each day, wringing all the possibilities, perfor- 
mance, and profit possible out of every encounter. They treat each moment 
as a gift. As the saying goes, "That's why we call today the present!" 

Stop Wasting time 

To quote Napoleon Hill again: "Do not wait; the time will never be 'just right. 
Start where you stand and work with whatever tools you may have at your 
command, and better tools will be found as you go along." In other words: 
Get to work! 

If you're a newer agent, don't waste time fretting over the fact that your skills 
or tools aren't at the level of other agents. Work with what you have and know 
that your abilities will improve with use. At the worst, you'll make a mistake 
from which you'll learn a good lesson. Finding out early in your career what 
not to do delivers value that will pay off again and again in your future. 


Stop letting others Waste yow time 

Too many consumers feel no loyalty or obligation to agents. They have the 
idea that agents are well paid through commissions, but they don't seem to 
acknowledge that we're not paid at all if no sale occurs. For that reason, you 
should only work with clients who are serious about buying or selling and 
who agree to work exclusively with you to accomplish their real estate objec- 
tives. Otherwise, you're letting real estate shoppers waste your time. 

Chapter 16: Maximizing Your Time ^23 

The biggest loss that most agents experience is lost opportunity. Each time 
you invest in helping a prospect who fails to take action or, worse yet, leaves 
you for another agent, your investment results in absolutely no financial com- 
pensation. That's like a personal injury attorney losing all his cases — he'd 
surely be out of business if he didn't ever win. 

Manage constant interruptions 

The best way to handle interruptions is to stop them from happening in the 
first place. 

Turn off your cell phone when you're conducting direct income-producing 
activities — for example, prospecting or lead follow-up. Tell the receptionist 
to hold your calls and take messages instead. Turn off your e-mail program so 
the "you've got mail" icon doesn't pop onto your computer screen. Sign out 
of your online instant message program. Hang a sign on your office door 
advising that you're not to be interrupted. 

Follow the same rules when you're with a client. Nothing is more impolite than 
an agent who handles phone calls while driving around showing clients prop- 
erty. At the very least, set your cell phone to vibrate rather than ring when 
you're in buyer interviews, showing property, or on listing appointments. 

Eliminate distractions for your own good and for the good of the relationship 
with the client you're serving. 

Keep phone calls short 

When you're making or taking transaction-servicing calls or production- 
support calls, you need to conduct business in the shortest amount of time 
possible. Otherwise you'll erode the time you need for high-value income- 
producing activities. To keep calls short, employ these techniques: 


is Establish an indication of the time available as you begin the call. For 

example, say something like, "I have an appointment in 15 minutes but 
your call was an important one and I wanted to get back to you as 
quickly as I could." This technique alerts the call recipient to your time 
limitation and says, nicely, "Get to the point quickly." The technique 
shows that you value the caller and made a special effort to make time 
for the conversation. 

If you're on a time-blocked schedule everything is treated as an appoint- 
ment, including times for returning phone calls, so you'll be speaking the 
truth. You do have another appointment in 15 minutes. This technique is 
particularly appropriate for prospect or client calls. 

j20 P art '^ : Running a Successful Real Estate Business 

is* Offer an alternative to a short phone call. If you think your client or 
prospect wants or needs more than a short return phone call, follow the 
above technique but then go one step further: Assure the other person 
that 15 minutes should be more than enough time but, if it's not, you can 
schedule a phone conference when you'll be available for an appoint- 
ment later in the day I've made this offer many times, and I've never had 
to talk with the client later. We've always managed to resolve the issues 
during the short conversation. 

*«* When possible, handle production-support calls with voice-mail mes- 
sages. Since you want to establish personal relationships that lead to 
face-to-face meetings, you don't want to rely on voice mail with prospects. 
But when you're handling service calls, voice mail is a time-effective 
option for both you and the other party. Make a call, leave a message, 
and offer the option to call you back (with the assurance that if your 
message resolves the issue there is no need for a return call). Follow a 
script such as this one: 

"Bob, I know thatyou're busy. I believe that this resolves the issue. If you 
agree, there's no need for you to call me back. If you do need to speak with 
me, I'll be available later today between 3:30 and 4:15. Please call me then. " 

Use your car to gain efficiency 
and career advancement 

One of the greatest assets in my early career was my car. It wasn't because I had 
such a glamorous vehicle. It's because I turned it into my skills-development 
classroom. I never turned on the engine without playing something that would 
teach me something (except when I had clients with me, of course). 

I'm a firm believer in the auto-university You have a large learning curve 
ahead and plenty of drive time during which you can "go to school" with CDs, 
CD series, and now podcasts that help you improve your business, sales, and 
personal skills. 

In contrast, listening to the radio is a waste of time. It teaches you nothing 
about how to improve or change your thinking, talents, bank account, and 
life. Use your drive time as learning time, instead. You're success-oriented or 
you wouldn't have bought this book. Keep acquiring new ideas by turning 
your commute into skills-development time, and get ready to watch your 
career take off. 


The Part of Tens 

The 5 th WaVC By Rich Tennant 

" There's been a lot o£ interest shovm in your 

home, but no o££ers. I suggest -we either lovrer 

the price or start selling advertising space o^ 

your virtual tour site." 

In this part.. 

from time to time along the path to real estate suc- 
cess, you may find yourself in search of a quick 
answer or a fast fix for addressing an issue unlike any 
you've seen before. When those moments arise, scan the 
five short chapters in this part. Each one features a con- 
cise summary of advice boiled down into the famous For 
Dummies ten-part format. 

Count on the upcoming chapters to share ten essential 
tools for real estate success, ten tips for working with 
buyers, ten big mistakes and how to avert or deal with 
each one, and ten Web sites you can click on for more 
information. This part should help you now and through- 
out what I hope is your long and rewarding real estate 

Enjoy your success! 

Chapter 17 

Ten Must-Haves for a Successful 
Real Estate Agent 

In This Chapter 

Using contact management software 

Dressing for success 

Investing in a quality telephone headset 

There are certain tools that I believe that every agent must acquire to help 
them be more effective in their business. These can be accumulated over 
time but the best approach is to get them now. 

A Good Contact Management System 

As a salesperson, you have to be able to keep in touch with prospects and 
clients easily and effectively. You need to be able to find names, addresses, 
phone numbers, and e-mail addresses in an instant. 

You can track your contacts the old-fashioned way (on notecards), but you'll 
outgrow that quickly. My advice is to invest in a CRM (short for customer rela- 
tionship management) software package. Many of the software packages avail- 
able, such as ACT!, GoldMine, SharkWare, and www. Salespeople . com, are 
specifically designed for salespeople. The purpose of a good CRM is to coor- 
dinate your leads and lead-management activities. An agent with a CRM can 
send e-mail, mail merge letters, and make phone calls with the touch of a few 
keys. They are able to track and follow-up on leads without having to remem- 
ber to do it. The CRM does the work of reminding them and generating the 
contact with the prospect. 


Part V: The Part of Tens 

Another option is to buy a software package that is specific to the real estate 
industry. These programs that are specific to real estate agents hold many 
advantages over the general sales programs. They're usually programmed 
with form letters and other sample correspondence that an agent may need 
to use. They also have sample lead follow-up and client follow-up plans already 
built in. Most have plans you can apply when marketing a property. They also 
have plans you can launch once you've secured a buyer for your listing. 

I recommend TOP PRODUCER or Online Agent. Both programs are real estate 
agent specific, and with TOP PRODUCER, you can choose to pay a small 
monthly fee (per user) for an Internet-access only version. This saves you all 
the upfront costs of the software, and you get the updates for free. You can 
also access your database from anywhere in the world as long as you have a 
high-speed Internet connection. 

A Real Estate Calculator 

An agent must have the ability to help her client figure out the approximate 
mortgage payment, net proceeds after the sale, and down payment amount 
needed based on loan to value ratios. 

Most importantly, an agent needs to be able to figure out her commission 
amount. When selecting a calculator, select one that has the features you 
want. I suggest features like payment calculation functions and ammortiza- 
tion functions. Also, ensure that you can easily figure out how to use it. Some 
have so many different (and unnecessary) functions and keys that figuring it 
out can take forever. 

Professional Attire 

Each real estate area or region has a set level of professional dress. Your first 
impression to a prospect can carry a lot of weight. If you're dressed well, 
they'll assume you're successful, even if you aren't. The public will make a 
judgment of you and your services, fairly or unfairly, based on how you dress. 

In most markets except resort or tropical markets, I think that a suit (a 
professional-looking dress would also work for female agents) is the correct 
attire for a professional real estate agent. I rarely went to work without putting 
on a suit. You feel better and more powerful when you're dressed well. When 
buying clothes, start off by buying classics that will never go out of style. Stay 

Chapter 17: Ten Must-Haves for a Successful Real Estate Agent J 3 7 

away from the ultra-trendy colors and styles. By investing in classics, you can 
mix and match and stretch your wardrobe. 

I also recommend having your shirts (or blouses) professionally laundered. 
There's nothing as crisp, clean, and professional as a well-starched shirt. It 
reeks of success. 

Personal Web Site 

With more than 85 percent of buyers using the Internet to search for proper- 
ties, your Web site has become an essential tool for lead generation and for 
exposing your sellers' homes. 

You don't need the fanciest, most expensive Web site in cyberspace. Just 
search out one of the many companies that make solid-template, mass- 
produced Web sites. These types of sites are extremely economical in the 
initial investment you have to make, as well as in monthly hosting fees. 
Many of these companies build cost-effective sites so they can get the 
residual income they charge monthly from hosting your site. 

You want to work with a company that builds template sites as well as custom 
sites. You will want a template Web site as a new agent. This will save you a lot 
of money on the start up costs of a Web site. As you progress in your career, 
you will want a custom-designed site. By selecting a company that is skilled at 
both, you save time when searching for someone to build your next site. 

You also want a company that has the ability to place you higher in the 
search engine rankings. This is where you'll generate traffic and leads. I 
encourage you to checkout www. ChampionRealtorWebsites .com. They 
build template and custom sites and have a program that generates high 
search-engine placement. 

Professional Business 
Cards and Stationery 

The proper business cards and stationery are essential tools for a successful 
agent. Opt for business cards with your picture on them to help your 
prospects create a quicker connection and recognition. 


Part V: The Part of Tens 


Make sure the photo's current. I have had too many agents hand me business 
cards that caused me to look three times at the card and back at the person 
to detect any kind of resemblance. Too often, our old pictures look like we 
just left the high school prom. 

Also, having notecards, letterhead, and envelopes that identify you is advis- 
able. You need to ensure that the professional image you work so hard to 
achieve is carried through with every contact and correspondence you have 
with your clients and prospects. 

A Clean, Professional, Reliable Car 

If you're a newer agent, you'll be working with more buyers than sellers in the 
early part of your career. By having a professional and reliable car, you can 
increase your probability of success. 

Ideally, you never want to meet prospects for an appointment at the home 
they called or e-mailed you about. You want to meet them at your office. By 
meeting at your office, you can suggest that you ride in one car to the home 
you're showing — preferably yours. With the vast increase in gas prices, you 
can make this a benefit to them. You're better able to model the consultative 
relationship you want by taking your car. 


By meeting them at the office rather than the home you also have protected 
yourself from meeting someone at an empty home that you don't know. A few 
times a year we hear stories of people, especially women, who meet people at 
homes, and the person meeting them was not a buyer but someone meaning 
to do harm to them. It is for your protection that you meet them at the office. 

Before taking the prospect out in your car, it's better to conduct a buyer 
interview. It's easier to draw them into your office for this type of meeting if 
you aren't meeting them at the home. When prospects arrive at your office 
and want to go see the home they're interested in without sitting through a 
buyer interview, you'll at least be able to conduct some of the interview en 
route to the home you'll be showing if they ride in your car. 

That is why you need a professional and reliable car. You must also have a 
car that is clean both inside and out. You don't need to drive a BMW, 
Mercedes, or Lexus, but you do need a car that demonstrates you're doing 
reasonably well in your business. When you're a listing agent, you can oper- 
ate by other rules. I didn't have a buyer in my car ever again midway through 

Chapter 17: Ten Must-Haves for a Successful Real Estate Agent jjj 

my third year in the business. The exterior of my car was perfect; the inside, 
however, was a trash can with papers, cups, bags, and clothes laying all over. 
It didn't matter, though, because the seller couldn't see inside my car. 

My advice is that if you can't afford a luxury brand of vehicle that is new or 
fairly new, buy one that is older with low mileage. Make sure it's a classic in 
style and prestige. I drove my original real estate car for more than eight 
years, and it still looked good when I sold it. 

A Headset for l/our Phone 

I'm a huge believer in prospecting and, from experience, I've discovered that 
a headset makes effective prospecting much easier. It allows you to stand 
while you're doing the prospecting, and because your hands are free, you're 
able to engage your body in the communication. A headset will improve your 
posture, position, energy, and enthusiasm. 

Another perk of a headset is that it will leave both of your hands free so you 
can type notes directly into your contact manager while you're talking with 
the prospect or client. It's the only way to do it. 

gj^NG/^ Don't go the cheap route. You can get cheap headsets for $50, but they also 

sound like cheap headsets. Make the investment of a couple hundred dollars 
and get a good one. I prefer wireless headsets because I'm completely free to 
walk around my whole office when talking to someone. 

A Number-Based Business Plan 

Too few salespeople follow business plans that encompass the sales ratios 
and numbers of the real estate business. They don't know, or take the time to 
calculate, the number of contacts needed to generate a lead, the number of 
leads needed to generate an appointment, the number of appointments 
needed to create a committed client, or the number of committed clients 
needed to generate a commission check. Once you know these numbers and 
your average commission check amount, you can calculate how to make any 
amount of money you desire to earn. 


Part V: The Part of Tens 

Sales Scripts 

Knowing clearly what to say in every situation really separates the high earn- 
ers from the low earners in real estate sales. Success leaves clues for anyone 
who's seeking it. Ancient scripture says, "Seek, and you will find." 

My best advice is to find yourself some scripts that are proven to work. Invest 
hours weekly practicing them to perfection. A word of caution: Practice doesn't 
make perfect, as the old saying goes. Practice makes permanent. Only perfect 
practice makes perfect. To achieve perfect delivery, be sure to have the fol- 
lowing: the right attitude, expectations of success, perfect pauses, and 
enough repetition to master each script. If you need scripts, you can go to 
my Web site at www . realestatechampions . com and download some 
scripts that we have available for free. 

Be sure that your role playing partner is as committed to your success as you 
are. My best role playing partner was my wife, Joan. I know there were times 
when, on the inside, she was thinking "not again," but she never showed it. 

Support System 

This isn't a tool in the classic sense of the word, but agents can use it as their 
most effective tool. In fact, this is probably one of the most important tools 
you'll come by. 

I think you'll find that with many successful people in life, there is a spouse, 
child, friend, parent, or significant partner that contributed mightily to their 
success. For example, I would never have had the success that I had in my 
real estate sales career had it not been for my wife. Countless days I'd go 
home feeling dejected, frustrated, and beaten up. Some days I even felt that I 
wanted to quit. She would listen, care, and love me. Then she would encour- 
age me to remember that even though today was a bad day, tomorrow would 
be better. She told me straight out that she believed in me and knew that I 
was going to be successful. To this day, I believe her support role caused my 
success to happen. 

Chapter 18 

Ten Tips for Working with Buyers 

In This Chapter 

Qualifying prospects and working exclusively with committed clients 
Managing the relationship to achieve a successful outcome 

yl^ost highly successful agents are listing agents who represent home 
/fl sellers. But the majority of all agents — and nearly all newer agents — 
earn most of their commissions by serving as buyers' agents. As you build 
your business in the early years, use the following ten tips to increase your 
effectiveness and efficiency when working with buyers. 

Qualify l/our Prospects 

Either prospects are motivated and able to buy, or they're not. Agents work- 
ing with low-quality buyer leads and hoping to raise buyers' interest levels 
and convince them to take action, most often are wasting precious time. 

An agent can offer counsel on favorable interest rates, low inventory levels, 
and the benefits of taking immediate action, but even the most skilled sales- 
person can't prompt an unmotivated prospect to adopt a sense of urgency. 

Quality prospects must be motivated to buy, must want or need to take 
action within a short time frame, and must be committed to working exclu- 
sively with you as their agent. If your prospect lacks these attributes, you're 
better off saying "next" and turning your time and talent toward another 
prospect. Turn to Chapter 9 for advice and a questionnaire to use when 
qualifying your prospects. 


Part V: The Part of Tens 

Work Only With Committed Clients 

Many agents think they cover this issue when they ask buyer prospects if 
they are working with another agent, but that's really the wrong question. 
The right question is, "Are you committed to another agent?" This gets to the 
heart of the philosophy you want your clients to adopt: commitment to work- 
ing exclusively with you. 

Agents receive compensation from committed clients. Clients who only 
"work" with you make no promises regarding the outcome. And the odds are 
high that they may switch to another agent at any time, leaving you empty- 
handed in the end. 

If you've advertised a listing and you receive an ad call or sign call, don't 
simply offer to meet and show the home. Make it your objective to meet the 
buyer prospects in your office. If you feel that you need to show them one 
home to open the door to commitment, do so. However, don't show addi- 
tional properties without testing their motivation to buy, confirming their 
commitment to buy, and gaining their loyalty to you as an agent. Loyalty is 
best achieved through an "exclusive right to represent" contract with the 
buyer. If you as an agent don't acquire that level of loyalty, you could get 
burned by the buyer. 

Don't Assume the Buyer Is Exclusively 
Committed to l/ou 

If you indulge yourself in the belief that a prospective buyer who comes 
through your open house, responds to your ad, calls after seeing your sign, 
or hits your Web site is dealing with you and only you, you're practicing wish- 
ful and faulty thinking. 


Make it your objective to be the first agent to set an appointment for a face- 
to-face meeting with a specific client, and ensure that it ends with the launch 
of your exclusive working relationship. Until you gain the buyer's agreement 
to work exclusively with you, you're in competition with all the other agents 
in your marketplace. 

Chapter 18: Ten Tips for Working with Buyers JJ / 

Ask For and Win an Appointment 

Whether you're working with buyers or sellers, the route to success starts 
with a face-to-face appointment — in your office — during which you can 
demonstrate your value to the prospect. 


The appointment is your gateway to a new client and, of course, to a closed 
deal and a commission check. In every conversation with a qualified prospect, 
ask for an appointment. Flip to Chapter 9 for detailed advice on how to handle 
the appointment, conduct your presentation, and convincingly set yourself 
apart from other agents. 

Be Ready to Counter Typical 
Buyer Misconceptions 

Buyers, especially first-time buyers who comprise the bulk of a newer agent's 
clientele, often come to the transaction with limited knowledge and a lineup of 
misunderstandings about how real estate agents and real estate deals work. 
Be ready to confront and overcome the following frequent problem areas: 

u* Many buyers don't see why they need to work exclusively with a par- 
ticular agent to find and buy a home. Many think that once they find 
the home of their dreams the seller's agent can handle the deal. As they 
see it, the seller is already paying the commission and so the buyer can 
just piggyback and take advantage of the agent's time and expertise. It's 
your job to help the buyer understand that by working exclusively with 
a buyer's agent — preferably you — they'll get the same kind of prefer- 
ential treatment and fiduciary counsel that, for example, attorneys 
promise when they agree to represent only one client in a legal case. 

i^ Buyers don't understand the importance of beginning their home 
search by being prequalified or, better yet, preapproved for a loan. 

Explain to the buyers that just as they want to find the best home, the 
sellers want to find the best buyer. If sellers are presented with two 
offers, one from a buyer who is clearly in a financial position to close 
the deal and the other who has a bunch of financial question marks, 
guess which one they'll choose. 

u* Too many buyers have a preconceived idea of their perfect home and 
think that if they look long enough — and if they get enough agents 


Part V: The Part of Tens 


searching on their behalf — they'll find the needle in the haystack. 

The reality is this: Buyers don't buy perfect homes; they turn the houses 
they buy into perfect homes. If you're representing a buyer in search of 
ready-made perfection, you either need to help your client forget the 
perfection myth or you need to select another buyer to work with. 

The list of buyer misconceptions goes on and on. Most buyers think they 
should never offer full price. Instead, they think they should always start with 
a low offer and come up later. And, maybe worst of all, they're convinced 
they can dally because the owners of the property they want to buy will wait 
for them to act. When you encounter buyers with these beliefs, tell them this 
truth: The most disappointed buyers are those who lose the home they want 
by not taking early action or by not being competitive enough in the offers 
they do make. 

Explain the Services \lou Provide 

You can't assume buyers understand what you do. They don't. Nor do they 
know how to distinguish you from all the other agents in your marketplace. 
Detail what you do and how you do it better than other agents by following 
this advice: 


u* Provide a complete explanation of the home buying process. 

u* Provide a complete overview of current and emerging real estate condi- 
tions in your market area. If you need help compiling a marketplace 
analysis, count on the information in Chapter 4 to help you out. 

u* Let your clients know that you're ready and able to assist them in select- 
ing the best home in their price range. 

u* Write your purchase agreement (the contract between the buyer and 
seller) to correctly and clearly express your intentions and how you'll 
represent the buyers' interests. 

W Submit your purchase agreement in a manner that presents you in the 
most favorable position. 

Chapter 9 offers advice to follow for making a quality presentation to win a 
listing — and the same advice applies to winning a buyer client. 

You must distinguish yourself from the competition. You need to prove your 
excellence and convince your prospects that you offer important personal 
services that they can only receive by choosing you to exclusively represent 
their interests in the purchase of their new home. 

Chapter 18: Ten Tips for Working with Buyers JJ v 

bei/etop a Partnership With a Lender 

One of the best ways to win commitment from buyer prospects is to bring a 
mortgage originator into the relationship early on. This partnership delivers 
two major advantages: 

*«" The lender can determine the prospect's financial qualifications, which 
spares you from spending hours with prospects that are financially 
unable to buy or unable to buy at the level they desire. 

W By steering your prospect toward a trusted lender, you put the financial 
portion of the transaction into the hands of a skilled professional. Just 
as the number of real estate agents has exploded over the past five years, 
so have the ranks of the mortgage industry. If you leave the choice of a 
lender to chance, odds are better than good that the deal will go to a 
lender you don't know or recommend, leaving you working harder to 
pick up the pieces at the end of the transaction. 

Ask Buyer Prospects Plenty of Questions 

Contrary to popular belief, prospects don't want to listen to your sales spiel. 
They want to talk about their wants, needs, and desires and your benefits. 
Arm yourself with a good list of questions, and you'll be well on your way to 
not only gathering the information you need to do your job well, but also to 
establishing the rapport and confidence necessary to gain the prospect's 

To gather the information you need, discover everything you can about what 
the buyers are looking for in a new home. What area or areas do they prefer? 
What type of home do they have in mind? What home styles do they like 
best? What is their ideal move date? How many bedrooms, bathrooms, and 
other types of rooms do they want? How long have they been looking? Have 
they seen anything they've liked? What are their financing arrangements and 
how far along are they in securing the financing? How do they want to be 
communicated with? What is their expectation of you as an agent? 

Take Control 

When you work with seller prospects, either you get a listing contract or you 
don't. Right then and there, you know whether you have a committed client, 


Part V: The Part of Tens 

and you know exactly what the sellers expect to get out of the deal, because 
the sales price is right on the agreement. 

Buyer prospects are harder to pin down. They may be inclined to work with a 
number of agents. They may change their minds about what they really want. 
They may have lofty and unrealistic home expectations. For these reasons 
and more, as a buyers' agent you need to take control and manage the agent- 
buyer relationship. 

The first step is to convince the buyers of the value of working exclusively 
with one agent. The next step is to find out the buyers' purchase and service 
expectations by asking the kinds of questions detailed in the preceding sec- 
tion. The third and most important step is to take control and guide the 
buyers through the home viewing, property evaluation, home selection, 
and purchase phases. 

In the process, be ready to serve as your client's reality check. More often 
than not, you'll have to lower your buyers' expectations regarding what their 
dollars can buy by gently adjusting their champagne taste buds to align with 
what looks more like a beer budget. 

It's Okay to Say No 


If the client wants you to do something you feel you can't, say no. If you can't 
meet them on Saturday, say so. If they're asking you to write a ridiculous offer 
that will only make you look bad to the other agent and seller, say no. If they 
want you to participate in a shady transaction where the money trail is cov- 
ered, say no. 

I was asked many times throughout my career, especially in the early days, 
to engage in transactions with "creative financing." Less-than-honest buyers 
know to seek out new, hungry, and inexperienced agents to work with on 
their "innovative" deals. Be aware that too often "creative financing" 
schemes also fit under another category — it's called fraud! 

Chapter 19 

Ten Biggest Mistakes and 
How to Avoid Them 

In This Chapter 

Avoiding the land mines that can derail success 
Knowing what red flags to watch for 


s the saying goes, an ounce of prevention is worth a pound of cure. 
Consider this short chapter to be your prevention formula. 

Fatting to Build \lour Real Estate 
Practice as a Business 

Most real estate agents launch their careers with only two objectives: To 
achieve a certain level of income and to enjoy the freedom of self-employment. 
Only a rare few start out with the idea of building a business that will grow for 
years and that can be sold to someone else in the future. 

If you adopt a business owner's mindset, you'll derive far greater benefits 
from the time, effort, and money you invest in your real estate practice. 
Here's why: You need to make nearly the same investment in marketing 
strategies, customer service strategies, and time management techniques 
whether you operate as a single agent who sells homes or whether you run a 
real estate sales business that employs a team of transaction coordinators, 
listing coordinators, and buyer agents. 

The difference between how a single agent works and how a real estate sales 
business works boils down to this: To build a business, you need to design 
and perfect a set of business systems. In addition to the sales and customer 
service programs that every real estate agent needs to adopt in order to 
build a real estate business, you need to add systems that define how you 


Part V: The Part of Tens 

hire effectively, train consistently, hold others accountable, and establish, 
track, and monitor the performance of the agents who are part of your busi- 
ness team. 


Over the years, when I've been asked to define the secret of my real estate 
career success, I've always given the same true answer, and it's never what 
the person asking me expects to hear. Without hesitation, I say this: "I've 
never been a real estate agent. I've always been a business person that hap- 
pens to sell real estate as part of his business." That attitude, focus, and busi- 
ness approach will deliver more success than you can imagine. 

Poor Financial Management 

The number one reason people become real estate agents is to become finan- 
cially independent. However, remarkably few actually achieve that goal. When 
they don't, most often the culprit, surprisingly, is poor financial management — 
not poor earning performance. When it comes to developing wealth, the truth 
is that it's not about what you make. Instead, it's about what you keep. 

I've met agents who make half a million or even a million dollars a year in 
commissions and yet they're broke. You read that right: broke! And I'm not 
talking about a rare example or two. 

Too many agents enter the real estate arena with no business background, a 
lack of previous self-employment experience, and a play-now-pay-later mindset. 
Most of them end up in big trouble financially. They overspend on business 
expenses and then compound the error by overspending on personal expenses 
as well. They lack the backstop provided by a good budget that restricts spend- 
ing, sets aside funds for taxes, and allows for savings and investments. In other 
words, they're just like most other people in the United States today. 

Follow these few simple steps to avoid the financial problems that plague 
many agents: 

*«* Establish a business checking account. This separate account ensures 
that you don't mix your personal and business funds and expenses. 
Deposit your commission checks into your business checking account 
and then pay expenses — including payments to yourself — with busi- 
ness revenue. 

W Open two business savings accounts. One account can hold funds to 
cover your income taxes until they're due and one can serve as a 
reserve account that you draw from in lean commission months. 

Chapter 19: Ten Biggest Mistakes and How to Avoid Them J*}3 

is* Set aside funds for income taxes on an ongoing basis. When you 
receive a commission check, deposit the money into your checking 
account, and then immediately transfer 20 percent of the commission to 
your tax savings account. Doing this protects the funds needed for your 
tax obligation and will spare you from the quarterly or annual scramble 
that most agents endure when IRS filing deadlines loom. 

i<* Create a business rainy-day fund. At the same time that you transfer 20 
percent of your commission check to your tax savings account, transfer 
10 percent to your business savings account. If you hit a slow month, 
you'll have a reserve to draw from. 

is* Set up a retirement plan. Commit to financial success by planning for 
your long-term security. Each time you receive a commission check, 
direct 10 percent to a simplified employee pension plan, a SIMPLE plan, 
a 401 (k), a Keogh plan, or an IRA account. If you're in a higher tax 
bracket, the tax benefits alone will deliver you a high first-year rate of 
return even if the account doesn't go up a dime. 

t-" Pay yourself. Set a personal salary amount that you draw monthly from 
your company. Pay yourself enough to set aside another 10 percent into 
your personal savings account. 

v* Take advantage of tax deductions. Being a self-employed business 
owner delivers many opportunities to create wealth. With those oppor- 
tunities come expenses that are often deductible from state and federal 
taxes. Meet with an accountant to figure out which expenses are 
deductible. Then keep careful track of expenses and deduct every one 
that you can when you complete your tax return. 

Not Buying Enough of What l/ou Sell 


Significant wealth in the real estate arena comes not from the sale of real 
estate — though commissions from sales certainly help — but from your own 
acquisition and ownership of properties. Inquire and you'll quickly discover 
that the wealthiest agents believed their own sales pitches and purchased 
properties regularly and consistently. In fact, I've yet to meet a successful 
long-time agent who, looking back, thought he or she bought enough. I cer- 
tainly fall into that category. But, at least I bought some. 


Before I embarked on my real estate career, my father gave me some excel- 
lent advice. He said, "Dirk, you need to understand that dentistry didn't make 
me financially independent. My dental practice created the cash flow that 
allowed me to make investments in real estate, which in turn created finan- 
cial independence. As you build a successful real estate sales business, use 
your cash flow to purchase the real estate that will make you wealthy." 


Part V: The Part of Tens 

Poor Use of Time 

Your time is your most precious finite asset. A finite asset is something that 
you cannot grow or expand dramatically in total volume. You have the option 
of better use, but you can't increase the amount. We all have 24 hours in the 
day with no hope for acquiring a 25th. Discover ways to control your time 
and you'll be able to control your life, your income, and your wealth. Chapter 
16 focuses on nothing but time management. Make time to read it! 

Not Investing in \lour Most Important 
Business Asset: j/ourself! 

Too many agents spend a fortune on what they wear and what they drive and 
spend nothing on the improvement of their skills and mindset. 

Look at successful companies and you'll see that they invest a small fortune 
annually on what's called research and development, or R&D. They spend 
this money knowing it will constantly improve the products and services 
they offer the public. As a real estate agent you should do the same. Luckily, 
though, your R&D takes the form of self-development programs that 
improve your skills and mindset, and those hardly cost a fortune. 

Dedicate 5 percent to 10 percent of your annual business expense budget to 
self-improvement. Then, throughout the year, enroll in courses, buy books, get 
involved in coaching, and listen to audio programs to improve your skills — 
and your business success. 

Making Yourself Available to 
Prospects and Clients 24- 7 

The most respected professionals are not available to their clients round-the- 
clock. They set normal, professional work hours, conduct business in their 
offices (where clients come to meet them), and make after-hours appointments 
a rare exception. 

Doctors, dentists, attorneys, accountants, and financial planners are service 
professionals, yet none make themselves available 24 hours a day, 7 days a 
week. In contrast, most real estate agents follow a work schedule that runs 
practically round-the-clock. What results from this workaholic approach is a 
loss of momentum and eventual burnout. 

Chapter 19: Ten Biggest Mistakes and How to Avoid Them Ju3 

Give yourself a break. Refer to Chapter 16 to take back control of your time. 
Set working hours, manage your days, schedule personal and family time 
each day and week, and commit to vacations that allow you to restore your 
energy and enthusiasm. Remember, real estate isn't your life. Rather it's what 
you do to fund your life. 

Failing to Communicate Frequently 

The biggest complaint of real estate clients is the lack of agent communica- 
tion. The solution is to establish a great communication system that you and 
your clients both buy into. 

As you launch the client-agent relationship, explain the frequency of commu- 
nication you plan to have with your clients, and check to make sure that level 
of communication meets their needs. 

As your clients' deal becomes a pending transaction, reconfirm the level of 
frequency and method of communication they prefer. Some people only need 
e-mail updates. Others, like me, prefer the personal connection that a phone 
call offers. 

Lastly, don't quit communicating with your clients after your commission 
check is cashed. Ongoing communication wins you clients for life and provides 
the kind of endorsements that lead to new clients and sales. See the section in 
Chapter 15 titled "Creating After-the-Sale Service" for advice on how to win 
clients for life. 

Being Inconsistent 

This is the old tortoise versus the hare lesson. In real estate, as in most other 
endeavors, consistency leads to larger-than-expected rewards. However, if 
you're inconsistent, your results will be notably disappointing. Inconsistency 
derails success faster than any other factor. 

To a real estate agent, the consistent activities of daily prospecting, daily lead 
follow-up, daily practice of sales skills, daily personal development, weekly 
planning, and scheduled evaluation time create exponential return compared 
to the effort invested. On the other hand, occasional bursts of activity create 
work with little payoff. 

As an easy analogy, say that you want to lose five pounds next month. To 
achieve your goal, you figure that you need to increase your physical exer- 
cise by running or walking 60 miles over the upcoming 30 days. You could put 


Part V: The Part of Tens 

in the miles over a few muscle-aching days (after which you revert to ice 
cream sundaes and afternoons on the sofa), or you could commit to walk or 
run two miles a day for each of the next 30 days. Which approach do you 
think offers the greatest probability of success? The consistent approach 
always wins out. 

Ignoring the Fundamentals 

The fundamentals of real estate sales success aren't exciting or exhilarating, 
and for that reason it's easy to get sidetracked by new ideas that seem more 
interesting and innovative. 

Consistent prospecting, client communication, transaction management, and 
flawless property marketing are hardly flashy, and they never make headlines 
or draw crowds. In fact, on some days these activities are downright boring. 
Meanwhile, sales gimmicks generate enthusiasm, attention, and publicity — 
even if for just a quick moment in time. 

Agents seeking public recognition can count on being rewarded by flashy pro- 
motions, but they can't count on making more money. Repeat this line like a 
mantra: You can build your business for your ego or you can build it for your 
income, but you can't do both at the same time. If financial success is your 
objective, stick to the fundamentals that are detailed throughout this book. 

Talking Too Much, Listening Too 
Little, and Then Going Silent 

By design, we have two ears and one mouth. Unfortunately, most of us use 
our mouths twice or three times more than we use our ears. 

When working with prospects, customers, and clients, follow this advice: Use 
your mouth primarily to ask questions. Contrary to popular belief, the person 
asking the questions — not the person talking or answering questions — is 
really the person in control. After you ask a question, accept and enjoy the 
pause and silence that precedes the response. Your power as a salesperson is 
intensified if you're willing to withstand the temptation to barge into the silence 
that follows your question. There is an old sales adage, "Whoever talks first, 
loses." It basically is saying that when you ask a question, be quiet. This is 
especially true if you ask a closing question or for the order. Be quiet and let 
them sign the contract. 

Chapter 20 

Ten Web Sites for Real 
Estate Agents 

In This Chapter 

Where to go online for leading real estate industry information 
Sites that keep you up-to-date on the latest-breaking industry news 

X^eliable estimates have it that you can find some 50 million Web sites 
V % online today. Give or take a few million and you still have an enormous 
information resource available from the comfort of your home office. This 
chapter shares ten great sites you can visit on a regular basis. 

Real Estate Champions is my real estate training and coaching company, and 
I wouldn't be much of a salesperson if I didn't say our site was the best. It's 
full of tools, tips, articles, and scripts that help you advance your perfor- 
mance to the highest level. Sign on frequently, because we constantly add 
new material, techniques, and guidance to help you achieve your dreams in 
life through your career as an agent. While at the site, sign up for the free 
newsletter, Coaches Corner, to receive weekly motivation, coaching, training, 
and mentoring. 

As the official membership site for the National Association of Realtors (NAR), 
www. realtor . com is the voice for all of real estate. Even though it's designed 
for Realtors, the site is a wealth of information for anyone interested in real 


Part V: The Part of Tens 

estate. It contains the latest information on housing sales and prices, as well 
as forecasts for the residential and commercial real estate markets prepared 
by NAR's housing economists. The news section summarizes major trends 
and issues in real estate. REALTOR Magazine Online contains how-to informa- 
tion for consumers and real estate professionals. 

What's your plan for Internet leads? Are you being held hostage by third- 
party interlopers who are extorting money from you for leads you deserve 
anyway? This site contains information that will help you acquire Internet 
leads without paying a fortune to third-party lead kidnappers or paying thou- 
sands of dollars per year for pay-per-click traffic. 

Inman News is the nation's leading independent real estate news service. It's 
the content provider to more than 250 U.S. newspapers and over 50,000 Web 
sites, which reach millions of consumers each day through clients and part- 
ners such as The Los Angeles Times, The Miami Herald, The Washington Post, 
The Denver Post, The San Francisco Chronicle, the Chicago Tribune, Yahoo!, 
Microsoft, Google, The Wall Street Journal Online, CBS MarketWatch, and many 
more. The Inman site offers free daily real estate news updates, featured 
home and newsmaker videos, and a blog where industry leaders sound off. It 
also offers information-based products and services for real estate profes- 
sionals and consumers, and it links you to information about Inman's two 
annual technology conferences for the real estate industry. 

By now you've likely passed your licensing exam and are in the early days of 
your career. What you discovered in your original real estate school gave you 
a good base of knowledge, but it isn't enough to assure that you'll make it to 
the top in the real estate business. As an analogy, think of real estate school 
completion as getting your high school diploma. It's the gate-opener for all 
future education. The Real Estate School of Champions is a Web-based training 
location for self-paced, ongoing real estate education. My company designed 

Chapter 20: Ten Web Sites for Real Estate Agents j(}y 

this online school to take you through the additional levels of education neces- 
sary for your ongoing success. Think of it as the place where you can get your 
real estate college education, obtain your graduate degree, and complete your 
doctoral program. For anyone serious about building a successful career and 
business in real estate, this Web site is a must. 

This site is the online home of the Real Estate CyberSpace Society and it's 
loaded with features for real estate pros. Click on the "Top 25 E-Tools" button 
to access one of the site's most popular sections. This section houses free 
tools for any visitor. This site also links you to Real Estate CyberSpace Radio, 
where you can listen to briefings (backed by handout summaries) from the 
top real estate trainers and agents. The Real Estate CyberSpace Society pro- 
duces the annual National Real Estate On-Line Convention that attracts over 
40,000 attendees each year. Society membership information is available on 
the site's home page and is worth your serious consideration. 

Realty Times is the premier news and advice Web site for real estate con- 
sumers and industry professionals. It offers unique market condition reports 
from industry experts that tell consumers which way the wind blows in any 
local real estate market. The site also provides schedules and information for 
Realty Times TV, the first news-based home buying show in the nation, which 
broadcasts weekends on national TV. Segments include Realty Times Outlook, 
Mortgage Moment, Ask Realty Times, and Market Conditions (an overview), as 
well as video tours of fifty to seventy homes across the U.S. and Canada. Visit 
the site regularly to keep your finger on the pulse of the real estate market- 
place and to tap into a volume of industry information that will help you build 
a successful career in the real estate business. 

Formed in 1995, RealtyU has developed into the nation's largest network of 
real estate schools with over 240 campuses across North America. Collectively, 
RealtyU has over 500 qualified and licensed educators that offer more than 


Part V: The Part of Tens 

6,000 courses and programs every year. In 2005, RealtyU schools taught over 
305,000 agents in classrooms and 35,000 online. RealtyU also manages an 
online bookstore targeted at helping agents locate quality and hard-to-find real 
estate books, as well as products focused on increasing agent productivity. 



IRED, the International Real Estate Digest, is a leading source for independent 
real estate information. The site contains one of the most inclusive directories 
of real estate resources available. It includes more than 50,000 links to real 
estate-related Web sites, each reviewed by IRED for appropriate and useful 
content before being added to the directory, which is segmented for use by 
professionals and consumers in 110 countries. The site is rich with tools and 
resources for real estate agents and mortgage lenders, with the majority of the 
resources specific to the interests of the agent community. 

DirkRecommends. com 

With so much information available, the resources on this list could have run 
dozens of pages long. Instead, I decided to create a site specifically designed 
to keep you connected to the best agent products and services in the real 
estate industry. Visit www. dirkrecommends . com to find a list of continu- 
ously updated resources that I've carefully evaluated to ensure your safety 
and satisfaction. 


• Numerics • 

11 a.m. rule, 312 

80:20 rule, 307-312 

100 percent commission, 45 

ability, 163 
absentee client, 83 
absorption rate, 70 
accounting, 342 
accumulation, law of, 9, 88-89 
ACT! (software), 91 
active property, 189, 191 
activity plan, 55 
administrative task, 31, 317 
advertising. See also specific types 

agency selection, 47, 50 

client creation versus customer 
service, 15 

competitive position, 264 

creation, 227-231 

expired listing contact, 124 

lifetime clients, 284 

market research results, 72 

mass marketing strategy, 18, 222, 295 

mortgage originator benefits, 59 

open house planning, 149 

overview, 221 

residential real estate benefits, 31 

targeted message, 222-227 
after-the-sale service 

communication strategies, 289-290, 

gifts, 290-291 

lifetime clients, 286-287 

overview, 287 

transaction-period tasks, 288 


preselection research, 48-53 

relationship, 2 

tips for new agents, 54-59 
agency selection 

comparing agencies, 53 

interviewing the broker, 50-53 

making a final choice, 53-54 

narrowing options, 48-54 

weighing options, 41-48 
agenda, 170-171, 179 
agent. See real estate agent 
air freshener, 152, 219 
ambiance, 219 
amenities, 232 
appliance, 215 

definition, 84 

expired listing contact, 125 

FSBO listings, 135-137 

importance, 337 

location, 332 

open house objectives, 144-145, 153-154 

presentation formula, 171-178 

presentation guidelines, 164-171 

prospecting goals, 84 

time management activities, 316-317, 318 

tracking tips, 90-91 
appraisal, 185-186 
appraiser, 258 

bubble, 187 

cause and effect, 62 

history, 62-63 

market analysis, 68 

supply and demand, 62, 71 
architecture, 211-212 
assertiveness, 169-170 
assistant, 31 
authority, 163 

average-days-on-market statistic, 
267-269, 272 

jf}2 Success as a Real Estate Agent For Dummies 


baby boom generation, 62 

Bailey, Keith (Customer Service For 

Dummies'), 301 
basement, 209, 210 
bathroom, 209, 215 
be-back listing, 164 
bedroom, 216 
blame, 300 
body language, 167 
BPO (broker price opinion), 186 
brand-building site, 234 
brochure, 93, 132 

agent-agent relationship, 58 

market research tips, 65 

preselection questions, 50-53 

relationship building, 54-56 
broker price opinion (BPO), 186 
brokerage fee, 45-46 
bubble, 187 
budgeting, 27, 91-92 
builder, new home 

competitive market analysis, 192 

multiple listing service submissions, 64 

residential agent specialties, 23 
bullpen, 33 
burnout, 85 

contact, 72, 98-99 

management, 31, 342-343 

multiplier, 17-18 

plan, 333 
business card 

open house objectives, 144 

open house preparation, 152, 154 

overview, 331-332 

referrals, 104 
business hours 

commercial real estate benefits, 26 

increased volume, 36 

residential real estate drawbacks, 36-37 

schedule, 313-319 

specialty selection, 39 
buyer. See also client; prospect 

acceptance or advance of offer, 251-256 

clutter, 214-215 

commitment, 336 

earnest money, 248 

FSBO challenges, 133 

misconceptions, 337-338 

offer below list price, 252-255 

open house benefits, 140-141 

paint condition, 212 

prospecting, 77-78 

referral development strategy, 106 

representation for offer, 249-250 

themed bedroom, 216 
buyer-agency agreement, 153, 246 
buyer's market, 67 

calculator, need for, 330 

calculator personality, 206 

call to action, 238 

calming demeanor, 247, 312 

candle, 152, 218 

canned presentation, 166 

capital investment, 1, 29 

capitalization rate, 24 

capture technology, 231 

car, 326, 332-333 

card, special occasion, 294 

Cates, Bill (Ultimate Referrals), 109 

cause and effect, 62 

checking account, 342 


lifestyle changes, 163 

mailings, 294 

referral sources, 105, 110 

themed bedroom, 216 
choke point, 259 
classical music, 219 
classified ad, 129, 130 
cleaning property, 207, 217 
clerical work, 310, 311,317 
client. See also buyer; prospect; seller 

commercial real estate drawbacks, 28 

common mistakes, 344-345 

conversion from referral, 113-114 

definition, 2 

objectives, 11 

overpricing pitfalls, 195-196 

preparation for sales process, 246-247 

index 353 

referral sources, 97 

view of mortgage originator, 59 

Web site design, 238 
client counseling 

fiduciary responsibilities, 11-12 

preshowing improvements, 206-210 
client creation. See prospecting 
client, lifetime 

after-closing services, 286-287 

customer service, 283-287, 299-304 

overview, 281 

relationship building, 282-283 
closed-property analysis, 69-70 
closet, 215 

derailment causes, 248, 259-260 

FSBO challenges, 133 

gift for client, 290-291 

lifetime clients, 286-287 

listing presentation formula, 177-178, 181 

overpriced listing, 201 

overview, 245 

price, 189 

seller's emotions, 248 

team, 257-259 

time management issues, 312 
clothing, 215 

client counseling, 207 

preshowing tasks, 212-216 
CMA (competitive market analysis), 

186-194, 249 
coaching program, 52 
colonial-style home, 212 
color, paint 

curb appeal, 147 

preshowing improvements, 208, 211-212 
commercial real estate 

benefits, 24-26 

disciplines, 23 

drawbacks, 27-28 

overview, 22, 23 

versus residential real estate, 21-24 

specialty selection, 38-40 

after-the-sale service, 292 

agency selection, 44-45, 52 

commercial real estate drawbacks, 28 

residential real estate benefits, 31 

savings account, 343 

service disaster, 300 

buyer's commitment to agent, 336 

income potential, 30 

overpriced listings, 202 

prospecting guidelines, 81-82 
commodity, 157 
communication. See also specific types 

common mistakes, 345, 346 

lifetime clients, 284, 287, 289-299 
comp, 191, 193, 252 
competition, agent 

agency relationships, 57 

expired listing, 134 

list price, 225-227 

presentation formula, 172-174 

rejection, 134 

residential real estate benefits, 32 
competitive market analysis (CMA), 

competitive position 

comparison with other agents, 272-274 

definition, 224, 263-264 

determining, 271-272 

goals, 274-275 

listing presentations, 272-273, 278-280 

market share, 275-278 

marketing message, 224-227 

overview, 263 

statistical calculations, 264-271 
complacency, 282 
computer, 52, 79 
condo, 148 

confidence, 168-169, 180 
confirmation, 176 

attributes of successful agents, 9 

common mistakes of agents, 345-346 

expired listing contact, 119, 121 

law of accumulation, 88-89 

definition, 84 

expired listing, 117, 119-122 

FSBO listing, 129-134 

33 H Success as a Real Estate Agent For Dummies 

contact (continued) 

lifetime clients, 282 

management software, 91-93, 329-330 

market penetration, 277 

prospecting goals, 84 

referral cultivation rules, 102-104 

referral sources, 98-99 

tracking tips, 90-91 
contact information, 232 
continuing education credit, 56 
contract. See also specific types 

acceptance or advance of offer, 251-256 

FSBO listing, 132 

offer below list price, 252-255 

offer preparation, 249-250 

repair allowance, 260 
control, of deal 

advance or acceptance of offer, 251 

commercial real estate drawbacks, 27 

importance, 339-340 

listing presentation tips, 170-171 
conviction, 168 
cookies, 153 
co-op broker, 250 
copy, advertising, 228-230 
couch potato personality, 205-206 
counseling clients. See client counseling 
counter offer form, 132 
counter top, 209 
courtesy, 297 
Covey, Stephen (Seven Habits of Highly 

Effective People), 99 
creating customers. See prospecting 
creative accounting, 340 
creative avoidance, 80 
curb appeal 

open house preparation, 146-147 

preshowing tasks, 208-212 
current client, 97 
customer. See client 
customer relationship management 

program, 233, 329-330 
customer service 

checklist, 302-304 

versus client creation, 14-15 

explanation to client, 338 

extras, 301 

lifetime clients, 282-287, 299-304 

prospect qualification, 158, 159, 160-161 

referral cultivation rules, 101 
customer service, after-sale 

communication strategies, 289-290, 

gifts, 290-291 

lifetime clients, 286-287 

overview, 287 

transaction-period tasks, 288 
Customer Service For Dummies (Leland and 
Bailey), 301 


daily rate, 252 

after-the-sale communication, 294-295, 

agency selection, 52 

commercial real estate drawbacks, 28 

contact mining, 102-104 

referrals, 99, 100 
dated home, 205 
day off, 306, 316, 345 
day planner, 308 

days-on-market statistic, 267-269, 272 
deadline, 320, 322-324 

after-the-sale service tasks, 288 

agent partnerships, 250-251 

checklist, 302-303 

concessions, 255-256 

derailment causes, 248, 259-260 

market analysis, 69-70 

service encounter, 299-300 
deal, control of 

advance or acceptance of offer, 251 

commercial real estate drawbacks, 27 

importance, 339-340 

listing presentation tips, 170-171 
deal, negotiating 

agent partnerships, 250-251 

concessions, 255-256 

days on market, 267-268 

faxes, 246 

list-to-sold ratio, 267 

index 355 

offer below list price, 252-255 

offer preparation, 249-250 

overview, 245 

preparation of seller, 246-248 

protection of seller, 248-249 

win/lose clients, 256 
decision making, 13, 219 
decoration, 205, 207-209 
delayed closing, 259 
delivery, presentation, 167-170 

flyer, 233 

Web site, 235-236, 237-238 
desire, 161, 163 
digital camera, 242-244 
direct income-producing activity 

definition, 309 

time management plans, 309-312 

time-blocked schedules, 316-317 
direct mail. See mailing (Web site), 350 
disabled buyer, 230-231 
discrimination, 229-230 
distraction, 79-80, 312, 319 
divorce, 163 
domain name, 236-237 
dominance, 277-278 
dual-income family, 142 
dumb terminal, 52 
dumpster, 213 
duplex, 23 


earnest money, 248-249 

easy-exit listing agreement, 124 

education. See training 

ego, 109, 255 

80:20 rule, 307-312 

11 a.m. rule, 312 

after-the-sale service, 292, 294-296 
contact management software, 92-93 
distractions, 319 
open house benefits, 143 
open house follow-up, 156 
outside-the-home flyer, 232 
prospecting distractions, 80 
referral development strategy, 114 


failed deal, 248 

first impression, 218 

full-time versus part-time agents, 35 

offer below list price, 253-255 

preparation for negotiation, 247 

specialty selection, 40 
energy, 42 

enthusiasm, 42, 168, 288 
equity, 187, 201, 256 
errors and omissions (E&O) insurance 

fee, 46 
escrow closer, 258-259 

agency selection, 44 

agent-agent relationship, 57 

competitive positioning statistics, 

saying no, 340 

strategy for success, 18 
evening work, 316 

after-the-sale service, 297-298 

agency selection, 47-48 

lifetime clients, 282 

preparation for process, 246 

prospecting goals, 85 

real estate bubble, 187 

referral cultivation, 101 

client creation versus customer 
service, 15 

expired listing contact, 124 

positioning tips, 226 

referral cultivation rules, 101 
expired listing 

agent competition, 134 

benefits, 116-117 

causes, 119, 122 

competitive market analysis, 189-190, 191 

contact tips, 117, 119-127 

days-on-market statistic, 269 

versus FSBO listings, 127, 128 

need for sale, 163 

overview, 115-116 

qualification, 122-123 
eyeball, 237 

330 Success as a Real Estate Agent For Dummies 

Fair Housing Laws, 229-230 

FSBO location, 129 

open house benefits, 142 

support system, 334 

time management schedule, 313 
family room, 209 

advance or acceptance of offer, 251-252 

negotiating process, 246, 247-248 
feature, home 

advertising copy, 228-229 

outside-the-home flyer, 232 

sheet, 150 
fiduciary representation, 11-13 
file system, 244 
financial goal 

agency selection, 48 

overview, 10-11 

prospecting disciplines, 79-82 
financial management, 342-343 
financing sheet, 132 
finished basement, 209, 210 
first position, 259 
first-time home buyer, 78 
Fix-It personality, 204 
flextime, 317 
flooring, 209 

arrangements, 219 

plantings, 147,211 
flyer, 150, 152, 232-233 (Web site), 241 
fourplex, 23 
franchise fee, 46 
fraud, 340 

free report, 133, 231 
freedom, 26 
friend, 129 
FSBO (for sale by owner) listing 

agent competition, 134 

benefits, 116-117, 127-128 

contact, 129-134 

conversion rate, 128 

conversion tips, 129-134 

versus expired listings, 127, 128 

overview, 115-116 

prospecting, 78 

relationship building, 137 

scouting tips, 128-129 

seller's challenges, 133, 137 
full-time agent, 35 
furniture, 213, 214-216 


garage, 215 

gated community, 148 

gift, client, 290-291, 301 

broker-agent relationship, 54 
procrastination, 320-321 
prospecting tips, 83-85, 90-91 
referral development strategy, 107 
rewards, 322-324 

GoldMine (software), 91 

graduated split, 45 

grass, 211 

guest register, 132, 152, 154 

gung-ho renovator, 204-205 


handwritten letter, 294 
hassle compensation, 208 
have-to prospects, 156 
headline, 227-228 
headset, 79, 333 
high-priced home, 225 
high-probability lead, 118 
history, 62-63 

home. See also investment property; 

complete makeovers, 204-205 

equity loan, 201 

improvement, 204-210 

inspection, 255, 258 

office in, 33-34 
home builder. See builder, new home 
home inventory access, 13 
homogenous neighborhood, 192 
honesty, 30, 58 

Index 357 

hope-to prospects, 156 
hourly value, 323 
human connection, 250 
100 percent commission, 45 



commercial real estate benefits, 24 

mortgage originator versus real estate 
agent, 59 

residential real estate drawbacks, 37 (Web site), 241 
imagination, 228 
income potential 

agency selection, 43 

commercial real estate benefits, 25, 26 

commercial real estate drawbacks, 27, 28 

hourly value, 323 

listing agent benefits, 17 

possibilities, 1 

procrastination, 320-324 

professionalism, 19, 30 

residential real estate benefits, 29-31 

time management, 310 

work habits, 30 
independence, 26, 28 
indirect income-producing activity, 311 
information-distribution site, 234-235 
in-house listing, 25 
initial offer, 246 
initial training, 43 (Web site), 348 
inside-the-home flyer, 233 
insulting offer, 254 
intensity, 306 
interest rate, 229 
interest-only loan, 62-63 
interior design specialist, 214 

agency selection, 50-53 

FSBO conversion, 130-131 

open house objectives, 144-145, 153-154 

pricing feedback, 199-200 
inventory. See listings 
investment property. See also home 

after-closing services, 286 

commercial real estate disciplines, 24 

commercial real estate drawbacks, 28 

common mistakes, 343 

FSBO listings, 136 

residential agent specialties, 23 

residential real estate benefits, 30-31 

specialty selection, 40 
invitation, 148, 301 
IPIX equipment, 240 (Web site), 350 


junior representative, 25 


kitchen, 209, 210 
knick-knack, 214 

• L 


open house preparation, 147 

preshowing tasks, 210-211, 217 
Landvoice (FSBO listing source), 129 

accumulation, 9, 88-89 

advertising creation, 229-230 

agency relationship, 2 

agency selection, 44 

expired listing contact, 120, 121 

forced efficiency, 319 

low offers, 254 

prospecting tips, 81 
lead. See also referral 

definition, 84 

expired listings, 118-119 

FSBO listings, 128, 130 

information-distribution site, 234-235 

networking referrals, 98 

open house benefits, 141-143 

open house objectives, 144-145 

open house preparation, 149 

prospecting goals, 84 

screening tips, 107 

tracking tips, 90-91 

Web site design, 236, 237-238 

jf}0 Success as a Real Estate Agent For Dummies 

lead creation. See prospecting 

lead-based paint disclosure, 132 

leadership, 31 

lead-generation site, 235 

lease, 23 

leasing agent, 26 

Leland, Karen (Customer Service For 

Dummies), 301 
lender-required note, 260 
lessee, 23, 24 
lessor, 23, 24 
letter, 93 
license, 52 
life balance, 57 
life-long learners, 9 
lifestyle change, 163, 308-309 
lighting, 152, 219, 243 
list price 

basic pricing approaches, 185-186 

buyer's misconceptions, 338 

calculator personality, 206 

days on market, 267, 269 

expired listing causes, 119, 122 

feedback, 199-200 

FSBO benefits, 128 

home improvement, 206, 207-208 

importance, 194 

inside-the-home flyer, 233 

market analysis, 68, 186-194 

offer below, 252-255 

online real estate shopping, 225 

open house preparation, 148 

outside-the-home flyer, 233 

overview, 185 

philosophy, 194-198 

positioning tips, 224 

presentation formula, 176-177 

prospect qualification, 160 

reduction, 196-200 

sales objections, 180 

statistics, 265-267 

troubleshooting problems, 198-202 
listening, 346 
listing agent 

benefits, 17-18 

car, 332-333 

commercial real estate benefits, 25 

control of transaction, 251 

overview, 17 

residential real estate benefits, 31 
listing agreement 

definition, 117 

expired listings, 117, 124 

listing presentation guidelines, 165 

preparation for sale process, 246 
listing period, 202 
listing presentation 

competitive position, 272-273, 278-280 

conclusion, 181-182 

explanation of services, 338 

formula for success, 171-178 

guidelines, 164-171 

lifetime clients, 282 

order request, 181 

preparation for sale process, 246-247 

price reduction formula, 198, 200 

sales objections, 178-180 
listings. See also home 

agency selection, 42, 46, 50 

agent-agent relationship, 58 

days on market, 267-269 

low inventory, 142, 146 

market analysis, 67-71 

market research tips, 64-69 

prospecting, 77-78 

referral development strategy, 106 

sale of own, 250 
listings, expired 

agent competition, 134 

benefits, 116-117 

causes, 119, 122 

competitive market analysis, 189-190, 191 

contact tips, 117, 119-127 

days-on-market statistic, 269 

versus FSBO listings, 127, 128 

need for sale, 163 

overview, 115-116 

qualification, 122-123 
listings sold statistic, 269-271, 272 
list-to-sold ratio, 265-267, 271, 272 
loading time, 235 

approval, 249, 253, 337 

officer, 58-59, 257 

Index 359 

logic, 218 

loss leader, 140 

loss ratio, 43 

lower-credit client, 59 

loyalty, 78 

luxury car, 332-333 



after-the-sale service, 293-294 

expired listing tactics, 117 

FSBO conversion, 132-133 

market research results, 72 

referral development strategy, 114 

virtual tours, 242 
manager, agency, 42, 54-56 

area statistics, 274-275 

dominance, 277-278 

penetration, 276-278 

share, 275-278 
market conditions 

agency selection, 47, 48, 49 

analysis, 66-71, 186-194 

client creation, 16-17 

commercial real estate drawbacks, 27 

expired and FSBO listing benefits, 116 

listing presentation guidelines, 165-166 

need for agent, 14 

preparation for process, 246-247 

residential real estate benefits, 29 

residential real estate drawbacks, 33 

ruling truths, 62-63 

targeted prospects, 82 
market research 

analysis, 66-71 

information sources, 63-65 

overview, 61 

prospecting tips, 81 

sales tips, 71-72 
marketing. See also specific types 

agency selection, 47, 50 

client creation versus customer 
service, 15 

competitive position, 264 

creation, 227-231 

expired listing contact, 124 

lifetime clients, 284 

market research results, 72 

mass, 18, 222, 295 

mortgage originator benefits, 59 

open house planning, 149 

overview, 221 

residential real estate benefits, 31 

targeted message, 222-227 
master bedroom, 209 
media outlet, 230-231. See also specific 


broker-agent relationship, 55 

price reduction, 200 

prospecting distractions, 80 
mega pixel, 243 
memory card, 243 
mental focus, 30 
mentor, 57 

middle-income buyer, 225 
migratory pattern, 66-67 
MLS. See multiple listing service 
mortgage originator 

benefits, 58-59 

delayed closing, 260 

overview, 260 

partnership, 339 

service encounter, 300 

overpriced listing, 201 

prospect qualification, 160, 161, 163 
Mr. Fix-It personality, 204 
multiple listing service (MLS) 

agency selection research, 49 

agent-agent relationship, 58 

bypassed submissions, 64 

competitive market analysis tools, 

expired listing contact, 118, 119-120 

market research tips, 64-69 

outside-the-home flyer, 232 

virtual tours, 242 
multiplex, 23 
music, 219 

jO Success as a Real Estate Agent For Dummies 


National Association of Realtors (NAR) 

agency selection rules, 44 

customer service ratings, 287 

market research tips, 65 

number of members, 297 

Real Estate Insights, 65 

targeted advertising, 223-224 

terminology, 2 

Web site, 65 
navigation, Web site, 235 
need to sell, 161, 163 
negativity, 30, 34, 55 
negotiating deals 

agent partnerships, 250-251 

concessions, 255-256 

days on market, 267-268 

faxes, 246 

list-to-sold ratio, 267 

offer below list price, 252-255 

offer preparation, 249-250 

overview, 245 

preparation of seller, 246-248 

protection of seller, 248-249 

win/lose clients, 256 
neighbor, 148 
net-proceeds sheet, 177 

definition, 97 

listing prospects, 77 

referral sources, 97-98 
neutral design, 216 

new home builder. See builder, new home 
newsletter, 92, 295 

ad copy, 228 

FSBO location, 129 

market analysis uses, 72 

Web sites, 348 
niche market 

market penetration, 276-277 

referral development strategy, 106-107 
No Call law, 81, 120, 121 
no, saying, 340 
non-escrow state, 258 
notecard stock, 294 


advance or acceptance, 251-256 

below list price, 252-255 

buyer's representation, 249-250 

human connection, 250 

preparation for negotiation, 246, 247 

agency selection, 42-43 

agent-agent relationship, 57-58 

commercial real estate benefits, 25 

location, 318 

prospecting tips, 79-80 

residential real estate drawbacks, 33-34 

specialty selection, 39 
older buyer, 223 
ongoing training, 43 
Online Agent (software), 91 
online real estate shopping 

advertising creation, 227-231 

effects, 140 

list price, 225 

open house benefits, 142, 143 

overview, 234 

popularity, 234 

Web site creation, 234-238 
open house 

agent-agent relationship, 58 

benefits, 140-143 

criteria for success, 145-149 

follow-up, 155-156 

FSBO conversion, 131 

hosting tips, 150-156 

number to host, 143 

objectives, 144-145, 153-154 

overview, 139 

preparation, 146-149, 151 

signs of success, 153 
open-door policy, 34 
optimism, 246 
order, 181 

outdated home, 205 
outside-the-home flyer, 232-233 



padding prices, 197 

color, 147,208,211-212 

condition, 212, 217 
paperwork, 257, 258-259 
Pareto's principle 

overview, 307 

steps, 307-309 

weighted tasks, 309-312 
part-time agent, 35 
past client, 97 
pastel color, 211 
pausing, 179 

pending property, 69-70, 189, 191 
per-agent productivity, 274 
perfect home, 337-338 
performance monitoring 

broker-agent relationship, 55 

commercial real estate benefits, 25, 26 

sales, 26 
personal relationship, 105, 313 
pet odor, 207 

client-agent relationship, 159 

pricing listings, 194-198 
phone call. See also sales call 

after-the-sale service, 289-290, 296 

headset, 79, 333 

scheduled, 317 

time management tips, 325-326 

business card, 332 

clutter clearing, 214, 215 

equipment selection, 242-243 

in-home flyer, 150 

inside-the-home flyer, 233, 239 

techniques, 243-244 
population trend, 67 
positioning. See competitive position 
positive mindset, 76 
postcard, 242, 291 
PowerPoint slide, 167 
presentation, listing 

competitive position, 272-273, 278-280 

conclusion, 181-182 

explanation of services, 338 

formula for success, 171-178 

guidelines, 164-171 

lifetime clients, 282 

order request, 181 

preparation for sale process, 246-247 

price reduction formula, 198, 200 

sales objections, 178-180 
previewing property, 193-194 
price, list 

basic pricing approaches, 185-186 

buyer's misconceptions, 338 

calculator personality, 206 

days on market, 267, 269 

expired listing causes, 119, 122 

feedback, 199-200 

FSBO benefits, 128 

home improvement, 206, 207-208 

importance, 194 

inside-the-home flyer, 233 

market analysis, 68, 186-194 

offer below, 252-255 

online real estate shopping, 225 

open house preparation, 148 

outside-the-home flyer, 233 

overview, 185 

philosophy, 194-198 

positioning tips, 224 

presentation formula, 176-177 

prospect qualification, 160 

reduction, 196-200 

sales objections, 180 

statistics, 265-267 

troubleshooting problems, 198-202 
price, sale, 265-267 
prioritizing, 78, 321-322 
privacy, 318 
problem solving 

agency selection, 52 

agent's tasks, 12 

list price, 198-202 

deadlines and rewards, 322-324 

production-supporting activities, 311 

objectives, 320-321 

overview, 319 

priority setting, 321-322 

steps to eliminate, 320 

vision, 320 

j%}2 Success as a Real Estate Agent For Dummies 

production-supporting activity, 

productivity, 306, 307, 323 

after-sale service, 297-298 

broker-agent relationship, 56 

commercial real estate benefits, 25 

fiduciary responsibilities, 11-13 

income potential, 19, 30 

overview, 11 

referral cultivation rules, 99 

residential real estate drawbacks, 34-36 

strategy for success, 19 

wardrobe, 330-331 
property disclosure, 132 
property profile, 232 
prospect. See also buyer; client; seller 

common mistakes, 344-345 

competitive advantage presentation, 
272-273, 278-280 

definition, 157 

qualification, 158-164, 335, 339 

virtual tours, 242 
prospecting. See also specific strategies 

common mistakes, 345-346 

consistency, 89 

versus customer service, 14-15 

definition, 75-77 

disciplines, 79-82 

goals, 83-85 

importance of sales ability, 15-16 

listings versus buyers, 77-78 

market conditions, 16-17 

market research, 71-72 

myths, 85-88 

overview, 14, 75 

persistence, 88-90 

positive mindset, 76 

qualified referrals, 111 

referral development mindset, 105 

referral drawbacks, 96 

residential real estate benefits, 32 

steps, 77 

targeted prospects, 82-83 

time management activities, 311, 316 
pruning, 322 
public board, 42 
punctuality, 30 

punctuation, 228 

purchase and sale contract, 132, 249-250 

purpose, sense of, 320 


questions, asking 
agent partnership, 251 
expired listings, 122-123, 124 
importance, 339 
open house tips, 154-155 
prospect qualification, 158, 159-161, 162 
sales objections, 180 
showing property, 220 
virtual tour production, 240-241 


rainy-day fund, 343 
ranch home, 212 
real estate agent 

agent-agent partnership, 250-251 

common attributes, 9-10 

public's view, 14, 37, 157 

self-view, 11 

strategy for success, 18-19 
real estate board, 64 
Real Estate Insights (National Association of 

Realtors), 65 
Real Estate License Exams For Dummies 

(Yoegel), 3 
real estate magazine, 50 
real estate search, 13 (Web site), 347 

(Web site), 348 

(Web site), 348-349 (Web site), 238-239, 347-348 (Web site), 242 (Web site), 349 (Web site), 349-350 (Web site), 349 
reduction, price 

early high pricing, 196-197 

on-the-button pricing, 197-198 

pricing problems, 198-200 



referral. See also lead 

business card, 104 

buyer versus listing prospects, 77, 78 

communication, 292-293 

conversion to client, 113-114 

cultivation rules, 99-105 

cultivation strategy, 105-112 

database, 99, 100 

definition, 96 

drawbacks, 95-96 

first-time contact call, 112-113 

levels, 110-111 

mindset, 105 

overview, 95 

qualified, 111 

sources, 96-99 
referral-based business 

overview, 96 

referral database, 99-105 

referral sources, 96-99 
refreshments, 152, 153 
regional market, 66 

coping tactics, 133-134 

listing presentation, 178-180 
relationship building 

FSBO listings, 137 

lifetime clients, 282-283 

trust, 56-57 
remodeling, 204-205, 210 
renovator personality, 204-205 
rent-a-desk arrangement, 45 
repair work 

after-closing services, 286-287 

closing derailment, 259-260 

customer service extras, 301 

list, 212 

preshowing tasks, 204, 205-206, 208 
reputation, agency, 42 
research service, 25 
residential real estate 

benefits, 29-33 

versus commercial real estate, 21-24 

drawbacks, 33-38 

overview, 22 

specialties, 23, 38-40 
resource, 306 

agent-agent relationship, 56-57 
broker-agent relationship, 56 
referral development call, 108-109 
residential real estate drawbacks, 37 
specialty selection, 39 

response mechanism, 231 

restricted-access neighborhood, 148 

retirement plan, 343 

reverse-no technique, 135, 136 

reward, 322-324 

commercial real estate drawbacks, 27 
rent-a-desk arrangement, 45 
residential real estate benefits, 29 
specialty selection, 38, 39 

rock feature, 211 

rudeness, 179 

salability, 195, 196 

agency selection, 43 

commercial real estate benefits, 25, 26 

commercial real estate drawbacks, 27, 28 

hourly value, 323 

listing agent benefits, 17 

possibilities, 1 

procrastination, 320-324 

professionalism, 19, 30 

residential real estate benefits, 29-31 

time management, 310 

work habits, 30 
sale, of business, 31-32 
sale price, 265-267 

market research, 71-72 

own listings, 250 

performance monitoring, 26 

residential real estate benefits, 31 
sales ability 

benefits, 16 

expired listing contact, 125 

FSBO versus expired listings, 127 

lack of training, 16 

overview, 15-16 

presentation delivery, 168-169 

jOQ Success as a Real Estate Agent For Dummies 

sales call. See also phone call 

capture technology, 231 

contact management software, 92-93 

expired listing, 117, 119-127 

FSBO listing, 130, 131, 133 

laws, 121 

open house follow-up, 156 

prospecting tips, 79-81, 88 

referral development strategy, 108-110, 
112-114 (software), 91 
satisfaction, customer, 300 
savings account, 342, 343 
saying no, 340 
scent, 152, 218-219 
schedule, 313-319 
screening leads, 107 

expired listing contact, 120, 125-126 

first contact with referral, 112-113 

FSBO listings, 135-137 

listing presentation guidelines, 166 

open house objectives, 145 

overpriced listing, 202 

overview, 334 

presentation formula, 174 

price reduction, 197, 199, 200 

prospecting station, 79, 81 

referral development strategy, 108, 109 

sales objections, 178, 179, 180 
search engine, 50, 237 
season tickets, 301 
second home market 

cause and effect, 62 

National Association of Realtors 
research, 65 

residential agent specialties, 23 
self-discipline, 9 
seller. See also client; prospect 

acceptance or advance of offer, 251-256 

concerns, 179-180 

emotion versus logic, 218 

expired listing contact, 118-122 

offer below list price, 252-255 

open house benefits, 141 

open house hosting, 152 

personality, 203-206 

preparation for negotiation, 246-248 

protection by agent, 248-249 

referral development strategy, 106 
seller's market, 67 

service delivery plan, 285-286, 301-304 
service encounter, 299-300 
Seven Habits of Highly Effective People 

(Covey), 99 
short-term note, 248 
showing property 

client counseling, 206-210 

first impression, 218-220 

overview, 203 

seller personality, 203-206 

virtual tour, 240 
shrine wall, 214 
shutter, 147, 209 
siding, 147 
sign, for sale, 129 
sheet, 144, 152, 154 
smoke odor, 207 
social contact, 98-99 

agency selection, 52 

competitive market analysis tools, 

customer relationship management, 

flyer design, 233 
sold property, 188, 191, 193 
sound system, 219 
spam, 296 

special occasion card, 294 
square foot pricing, 193 
staff, 31, 80 
staging, home 

clutter clearing, 214-216 

decorations, 216 

overview, 213-214 

analysis, 271-272 

calculations, 265-271 

comparisons with other agents, 272-274 

goal setting, 274-275 
storage unit, 213, 215 



strategic partners, 58-59 

suit, 330 

sun, 243 

supply and demand, 62, 70-71 

surface replacement, 209, 217 

targeting prospects, 82-83, 130-131 
tax, 286, 343 
teamwork, 40 
technology equipment 

digital camera, 242-244 

virtual tours, 240-242 
telephone call. See phone call; sales call 
testimonial, 234 
thank-you note 

after-the-sale service, 289, 297 

agency selection, 54 

contact management, 93 

FSBO conversion, 132 

open house follow-up, 155 

presentation follow-up, 182 

referral cultivation rules, 101 

referral development strategy, 112, 114 
themed bedroom, 216 
time blocking 

mistakes, 317-319 

overview, 313 

steps, 313, 316-317 

worksheets, 314-315 
time management 

action-oriented attitude, 324-326 

common mistakes, 344 

contact management software, 92 

contact mining, 102-103 

income potential, 310 

listing presentation guidelines, 166-167 

listing prospects, 78 

open house benefits, 142 

overextended agents, 305-306 

overview, 305 

Pareto's principle, 307-312 

plan, 308-312 

pricing to please client, 195-196 

procrastination, 319-324 

prospect qualification, 159, 160 

prospecting disciplines, 79 

prospecting persistence, 90-91 

referral development strategy, 106 

schedule, 313-319 
time, open house, 149 
title company 

market research sources, 65 

purpose, 259 

strategic partnership, 59 
to-do list, 321-322 
toiletry item, 215 

TOP PRODUCER (software), 91, 330 

drive-by, 149 

flow through home, 215 

online, 237 

agency selection, 43, 51 

auto-university, 326 

broker-agent relationship, 56 

budget, 92 

commercial real estate benefits, 25, 26 

common mistakes, 344 

expired and FSBO listing benefits, 

residential real estate drawbacks, 34, 36 

sales, 16 

after-the-sale service tasks, 288 

agent partnerships, 250-251 

checklist, 302-303 

concessions, 255-256 

derailment causes, 248, 259-260 

fee, 45 

market analysis, 69-70 

service encounter, 299-300 
transaction, control of 

advance or acceptance of offer, 251 

commercial real estate drawbacks, 27 

importance, 339-340 

listing presentation tips, 170-171 
transaction, negotiating 

agent partnerships, 250-251 

concessions, 255-256 

days on market, 267-268 

3 V v Success as a Real Estate Agent For Dummies 

transaction, negotiating (continued) 

faxes, 246 

list-to-sold ratio, 267 

offer below list price, 252-255 

offer preparation, 249-250 

overview, 245 

preparation of seller, 246-248 

protection of seller, 248-249 

win/lose clients, 256 
tree trimming, 211 
trend, housing 

market analysis, 67-71 

real estate truths, 62-63 
trendy decorations, 208 
triplex, 23 
trust, 108, 130, 172 
turnover, agent, 35 


Ultimate Referrals (Cates), 109 

underwriting, 260 

urgency, sense of, 229, 319-320 

URL forwarding, 236 

USB cable, 243 


values, 47 
vanity item, 215 
virtual tour, 239-242 
vision, 320 
visual aid, 167 (Web site), 242 
voice-mail message, 326 
volatility, 29, 69 

warm referral, 98 
wasted time, 306, 324-325 
weasel clause, 249 
Web sites 

agency selection, 47, 50 

client creation versus customer 
service, 15 

creation, 234-238, 331 

Fair Housing Laws, 230 

free reports, 133 

FSBO listings, 129 

National Association of Realtors, 65, 238-239 

scripts, 334 

top picks, 347-350 

virtual tour production, 241-242 
win/lose client, 256 
work habits 

income potential, 30 

prospecting myths, 86 

prospecting persistence, 89-90 
work hours 

commercial real estate benefits, 26 

increased volume, 36 

residential real estate drawbacks, 36-37 

schedule, 313-319 

specialty selection, 39 
workaholism, 18, 37 
workspace, 33-34 

yard box flyer, 232-233 

Yoegel, John A. (Real Estate License Exams 

For Dummies'), 3 
younger buyer, 223 


wallpaper, 216 
wardrobe, 92, 330-331